should i invest in gold or silver 2015 ?: Three Tips for Making the Most of the Gold Bear Market
Mon, Jul 15, 2013
Best Way To Buy Gold As An Investment
It’s confirmed – gold is in a bear market.
Gold prices have fallen more than $700 an ounce from their 2011 high of more than $1900. The decline is more than 30% confirms gold’s in a bear market.
So should you invest in gold now?
The answer requires a bit of analysis of the current state of the gold market and
First off, the bear has been hard across the entire precious metals complex. Silver prices are down 60%. Major gold mining stocks are down 60% or more. Junior gold mining stocks are down 70% across the board with some falling as much as 90%.
At this point, however, it sure is tempting to pick up some gold and gold-related investments at a much cheaper price than you could have a week, a month, or a year ago.
But here’s three bit of gold investment advice to avoid the costly temptations and emotions you’re likely feeling and make the most of the current downturn in gold investments.
Gold Bear Market Tip #1: If You Have None, Buy Some Gold
Our advice since the 2008 market crash which created the best gold buying opportunity in a decade has been consistent.
If you don’t own any gold, get some.
Gold has a place in every investor’s portfolio. Gold is savings. It’s not for speculation the price will rise. It is there for protection against inflation and financial catastrophe.
Gold Bear Market Tip #2: How to Prepare for the Worst, Hope for the Best, and Make Money on Your Gold Investments Either Way
As Contrarian Investors, we know what we do is not easy.
But the rewards make it worth doing. Contrarian investors get more gains with less risk than any other investor out there.
So when it comes to the current market in gold, contrarian investors must take a different tack.
The Best Way To Buy Gold in its current price trend is to “average up.”
This is a simple investment strategy. It reduces risk significantly and doesn’t sacrifice very much of the capital appreciation potential of any investment you make. Here’s how it works.
The first thing to do is to buy gold. Don’t worry about the price too much. This is the starting point.
From there, you sit back and watch the gold price.
If it goes up, you buy more.
If it goes down, you don’t buy anymore.
This way your losses are limited to your initial purchase and nothing more. And if gold prices do resume their uptrend, you’ll buy more and more gold.
It’s that simple. And it guarantees you’ll only be buying a lot of gold if the price is on the rise.
To invest in gold or anything else the contrarian way, the best advice is to plan for the worst and hope for the best.
A gold investment strategy like the one detailed above will allow you do just that.
Gold Bear Market Tip #3: Three Words that Signal a Bottom in Gold Prices
Finally, as we watch gold prices decline steadily month after month, there’s only one way to know when the bottom is (rest assured, we’re getting close to the bottom). And it’s an indicator unique to the commodities industry.
All mined commodities, like gold and copper, reach their bottom when the companies that mine them can’t make any money doing so.
A mining company will shut its mines down that don’t make any money. That’s their only choice. They can’t keep mining gold at a cost of $1500 per ounce and sell it for $1200 and stay in business for very long.
As a result, when you see a number of major gold mines get put into “care and maintenance” (that’s PR-speak for “shut down”), you know the bottom is near.
Lately, a number of high cost mines have been shut down. There will be more if gold prices fall a bit more. But eventually supply will drop below demand levels and prices will rise again.
We saw this over a decade ago when copper, gold, and silver mines were all getting shut down. The inevitable result was price going up after a period of time when demand rose beyond the available supply.
The wisest commodity investors know this and this is their time to load up when mines are getting shut down and valued for next-to-nothing prices. Commodity prices come back. They always do. Gold is no different.
In the end, investing in gold is not much different than most other investments you make.
The most important consideration is the price an investor pays for their gold investments.
Whether it’s gold mining stocks, gold bullion, or other gold investments, the rule of buying low and selling high applies.
Right now gold prices are setting new lows. And there are very real risks gold prices are headed lower.
However, that’s good news for current and potential gold investors. They’ll be able to buy in to the next leg of the gold bull market at much better prices.
The rebound in gold will come eventually. Until then, these bits of gold investment advice will go a long way to making your gold investment a wise and profitable one.
The Group of Big Investors in United States.
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