Is Gold Still A Good Long Term Investment In 2015?
Mon, Dec 9, 2013
Gold Investors Still Believe Gold Still A Good Investment In 2015
The BuillionVault Gold Index hit 54.3 in October. Ratings above 50 shows gold investors are bullish on the future price of gold. Below 50 is bearish. The reading was up from 53 in September. So gold investors are not only bullish, they are getting more bullish.
Investor sentiment is just one indicator of future gold prices though.
We have a much more accurate gold investor sentiment indicator that shows investors are still extremely bearish on gold.
The gold investment investor indicator we use is the ratio of the SPDR Gold Trust (GLD) to Market Vectors Gold Miners ETF (GDX). It is determined by dividing the price of the GLD (currently $120) by the GDX (currently $22)
We call it the GLD/GDX ratio. And it is the perfect indicator of gold investor sentiment.
Since gold mining stocks value is based on the value of expected future earnings for gold miners which are dependent on future gold prices, the ratio provides a real time snap shot of gold investor sentiment.
When the ratio is low, which means gold stocks are high relative to the current price of gold, gold investors are bullish. When the ratio is high, they are bearish.
Right now the GLD/GDX ratio is at its highest point in years.
The chart below shows how much the ratio has changed in the past two years:
As you can see, gold investors are extremely bearish on the future value of gold. They continue to value gold miners much lower relative to gold than they have in a long time.
This is a great sign for Contrarian Investors still thinks that Is gold still a good investment in 2015 Now and looking to invest in gold and make other gold investments. Because gold stocks are the cheapest they have been relative to gold prices in an extremely long time.
It also shows when gold investment sentiment and gold prices do resume their rise, gold stocks will absolutely fly and make investors a fortune.
To determine when gold prices will resume their rise will happen just remember the most powerful driver of Gold Prices .That’s why gold still a good investment right now
That’s real (after inflation) interest rates. When real interest rates are low or negative, gold goes up. When they are up or rising, gold prices go down.
Over the last two years nominal interest rates have risen fairly sharply.
Meanwhile, inflation has been flat or may have even declined a bit due to ongoing slides in commodity prices.
Rising interest rates and benign inflation have pushed real interest rates to up. Gold prices and all gold investments have done exactly what we expect in this environment. They’ve gone down.
Certainly it is. Like every other type of investment, it has to be purchased at the right time to be a “good” investment.
Gold, however, will be a great investment when that trend in real interest rate changes.
The Group of Big Investors in United States.
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