Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is it Time To Dump Gold Stocks?

Commodities / Gold and Silver Stocks 2020 Jul 15, 2020 - 12:40 PM GMT

By: Submissions

Commodities

As a contrarian and long-term holder of Goldcorp. (now Newmont), the latest push higher in the price of gold begs the question: is now the time to sell? The concern, for the uninitiated, is that after the price of gold moves powerfully higher there is an uncanny tendency for forces to mysteriously align and push prices powerfully lower. These “forces” (excuse the conspiratorial flare), have been known to short paper gold contracts in seemingly unlimited quantities, and, according to some, with the implicit backing of the Federal Reserve…

Conspiracy or not, it is obvious that the paper-traded price of gold can have an impact on the physical price of gold and/or the sentiment of those that buy and sell precious metals. After all, just as “$1,800+ gold!” attracts attention, like it did today, so too can headlines like “COMEX gold suffers historic crash!”. In other words, while record inflows into gold ETFs this year are certainly noteworthy, the informed contrarian knows that record inflows can quickly lead to record outflows.


The paradox, if otherwise unclear, is that the central bank rigged financial system is a great reason to park some money in precious metals, yet gold is still, like it or not, a component of this rigged system. Is it possible that the entire financial system will remain rigged but gold will be permitted to roam freely? Is it really likely that gold, a direct competitor to fiat money, will win the war without “forces” even mounting a single attack? Suffice to say, when the record inflows into gold abate, there is the expectation that, akin to 2011, the price of gold will suffer a serious collapse. The question, in a word, is “when”.

So, is now the time to sell NEM and put this money to work somewhere else? My answer is that if your investment horizon is weeks or months, taking some money out of gold stocks may be a good idea. However, if your horizon is years or decades, selling a holding like NEM right now (as negative interest rates look set to be around for awhile), could be a big mistake. In short, if you are unable to tamp-down your contrarian spirit as the price of gold shoots higher and/or you fear some historic onslaught of mystery sellers backed by central banks arriving soon, buy some put options and bury them…because now is not the time to dump gold stocks.

By B Willett

http://www.fallstreet.com

© 2020 Copyright B Willett - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in