Sunday, August 7, 2022

Is It Too Late To Buy Gold

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Gold Stocks With The Most Momentum

Is It Too Late To Buy Gold?

Momentum investing is a factor-based investing strategy that involves investing in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stocks outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the stocks that had the highest total return over the last 12 months.

Gold Stocks with the Most Momentum

Source: YCharts

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Gold Market Outlook For 2021

Low-interest rates and financial uncertainty following the Covid-19 market crash caused gold to enter a bull market, rising from just above £36 a gram to over £45 last year. If financial uncertainty continues, most likely propelled by the weakening in economic growth following the pandemic, we could see gold hit new highs in 2021.

The Gold Rally Is Not Surprising

The gold rally is hardly any surprise to me, it is just a reflection of the devaluation of the US dollar. In my June article 5 ugly truths of the coming retirement crisis, I have highlighted that the US is going to play the same old trick of debasing their currency to take advantage of the global wealth transfer. So if gold is valued in dollars and the dollar drops, naturally the gold price will rise, in dollar terms.

You can see from the chart below that the US dollar index had a free fall from June till now.

But playing the gold game is probably be a bit too late now. I have positioned gold in my clients portfolios since January 2019. Yes, it was 2019 when gold was still trading at around $1,200. The trend was just so obvious to me then and it was a much easier investment decision to make than now. Below is the chart I drew for my clients in January 2019.

It doesnt mean that the price of gold wont go up. It is just that the money is harder to make now.

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Its Not Too Late To Buy Gold And Silver

Commentary on Precious Metals Prepared for CoinWeek.com..

On August 7 I wrote my companys latest monthly newsletter . The headline read The Wait Is Almost Over. As I write this early Tuesday morning, the price of gold is up more than 10% and silver over 25% in the past 20 days.

I didnt necessarily anticipate that prices would start rising to this degree in August. But I was expecting some excitement by the middle of September.

There are a lot of people now wondering if they missed the boat because they didnt buy physical gold and silver at the recent lower levels. They are paralyzed into inaction because

  • They fear that prices could once more drop sharply and somehow remain suppressed for a long time, or,
  • That prices could keep rising from current levels and they shouldnt wait any longer to jump in and buy.

The basic fear is that whether they buy or hold off from buying right now, it will turn out to have been the wrong decision.

I have some good news. You can relax.

There are shortages of physical gold and silver popping up everywhere. Inventories at the COMEX and in exchange traded funds are plummeting. Virtually all the major gold mining companies have closed some of their mines because they could no longer profitably continue operations.

With that perspective, dont beat yourself up because you didnt buy at $1,200 gold and $20 silver. If gold reaches $4,000 and silver tops $150, even todays price levels will prove to be tremendous bargains.

Coronavirus And Gold’s Price

With Gold &  Gold Stocks Rallying

The price of gold since the coronavirus pandemic has further reinforced its utility as a hedge to the S& P 500. When the stock markets crashed, gold hit new highs not seen since 2012, with many analysts still predicting further gains. This is most likely a result of investors reallocating their wealth into gold, as it is known as a âsafe havenâ and a hedge to stock markets and financial uncertainty.

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Gold Investing: Gold Stocks And Etfs

Gold stocks and gold ETFs are the simplest way for individual investors to bet on a rising gold price. Investing in gold stocks can be riskier, but it’s also potentially a more rewarding way of investing in the precious metal.

Investors have three major options, aside from buying gold coins or jewelry. They can buy gold stocks individually. They can buy an ETF that tracks gold stocks, such as the GDX gold miners ETF. Finally, they can get direct exposure to the precious metal itself via an ETF, such as the GLD ETF that tracks the price of gold.

Well-known gold mining stocks include Barrick Gold, Newmont and Kirkland Lake Gold stock. Another segment of the gold market is gold royalty companies. These provide financing to gold miners, typically in exchange for below-market-cost purchase rights of gold they produce. Examples of gold royalty companies include Royal Gold and Franco-Nevada stock.

You can research the top gold stocks, which are part of the broader Mining-Gold/Silver/Gems industry group, at IBD Stock Checkup.

There Could Be Little Gold Remaining

No one knows for sure how much gold remains. Gold discovery rates are decreasing, even as spending on exploration increases. A March 2015 report from Goldman Sachs warns that mineable reserves of commodities like gold, silver, platinum, and copper could become seriously scarce within two decades. Eugene King, European metals and mining analyst at Goldman Sachs, expanded on this in a research note saying, The combination of very low concentrations of metals in the Earths crust, and very few quality deposits, means some things are truly scarce. With demand reportedly on the rise and physical gold becomingly increasingly scarcer, it could be too late to buy gold in the future.

While its not too late to buy gold now, it could be later on for a number of reasons, including scarcity and price. No matter the turmoil at home, abroad, and in the digital world, gold continues to be a wise choice in light of the unknown and the unthinkable. If youre interested in diversifying your financial portfolio and increasing your financial security with precious metals, call U.S. Money Reserve at1-866-MINT-GOLD or before its too late to buy gold.

Also Check: Why Are Gold Prices Going Down

Go For Gold Not For Broke

No matter your view of whether the price of gold is a good bet, it makes sense to subject investment decisions in gold stocks or an ETF tracking gold or gold stocks to the same rigorous process as regular stock buys. That means waiting for a proper buy point and a buy signal.

The charts of gold stocks like NEM and GDX no longer look constructive. While FNV, IBD’s top-rated gold stock, looks more solid, all gold stocks are pretty closely tied to the fortunes of GLD, which has fallen well below its 200-day moving average. Prospects look somewhat brighter for the iShares Silver Trust ETF that tracks the silver price. SLV has bounced above its 200-day line and is about 6% below its recent buy point. Silver has both precious metal and industrial metal characteristics.

To find the best stocks to buy or watch, check out IBD Stock Lists and other IBD content.

Please follow Jed Graham on Twitter for coverage of economic policy and financial markets.

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When Investors Worry They Often Flock To Gold

Is it too late to buy gold? We ask RBCs George Gero, Wall Street guru

Gold is often looked at as a safe-haven asset. When Wall Street starts to crater, investors jump into gold in an attempt to limit the pain. Today, in the middle of a global pandemic, the metal’s role in investing would seem to be more important than ever — but there are some very mixed signals out there. Before you decide to buy gold today, consider these three issues.

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Why Is Gold Rallying

Gold is up about 19% so far this year, as lower interest rates and central bank stimulus have supercharged existing upward momentum for the precious metal.

Gold is typically seen as a “safe haven” asset in times of uncertainty because it is less volatile than other investments, like stocks. What’s more, the metal moves inversely to the U.S. dollar, meaning that when the greenback moves lower as it has done lately gold moves higher.

The current coronavirus downturn is slightly different, however.

Gold is being pulled in two directions.Cameron Alexanderdirector of metals demand, Refinitiv

Even as Covid-19 cases have risen and economic data worsened, equity markets have continued to rally. Cameron Alexander, director of metals demand at market data company Refinitiv, said that has caused gold to enter new trading territory.

“Gold is being pulled in two directions: One is the uncertainty,” said Alexander, referring to the still-escalating pandemic. “But equities are still doing really well,” fueled by central bank stimulus, he noted.

How Gold Stocks Perform Vs The Gold Price

In general, if you think gold has room to run, history would say you’re better off owning gold stocks than the yellow metal itself. However, if you think gold could be nearing a top, you’re probably better off holding gold than gold stocks, based on past performance.

Consider, from the gold price bottom in late 2015 through the August 2020 peak, GLD, the SPDR Gold Shares ETF tracking the commodity’s price rose 94%. Meanwhile, the VanEck Vectors Gold Miners ETF rose 244% over the same span. That reflects the dramatic corporate earnings improvement thanks to the higher price of gold. Improved earnings, in turn, allow mining companies to increase dividends as the price of gold rises.

Sometimes corporate dynamics and changing perceptions of them can take precedence. Even as the price of gold came down a bit, Franco-Nevada stock broke out to a record high in late December 2019. Newmont stock hit a multiyear high in that time frame.

Still, gold stock investors can never let down their guard. The descent for gold mining stocks from the 2011 price peak was much rougher than for the metal. To the trough in late 2015, GLD, which tracks the price of gold, tumbled 46%. Meanwhile, GDX, the ETF tracking gold miners, cratered close to 80%.

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Investing In Gold And Silver

If youre looking to invest in gold and silver, its not too late. Yes, gold may be approaching an all-time high, but it still has plenty of room left to run. With the potential for years of recovery ahead of us, just like post-2008, theres still a lot of growth left for the gold price.

Silver has even more room for growth. Despite its better performance over the past year than gold, silver is still far below its all-time price. But it stands a far better chance of doubling in price in the near future than gold does, as it often outperforms gold percentagewise when making big gains.

Just because gold and silver have a long bull run ahead of them doesnt mean you should drag your feet before deciding to invest. If youre thinking about investing in gold and silver, make your move before gold and silver climb any higher and before stock markets crash. Dont let any more time pass before you protect your retirement savings.

Best Month Of The Year To Buy Gold

Halal Universe Investment Talk: Is It Too Late To Buy Gold ...

If you missed buying gold in January, when is the next best time to buy?

We broke the historical data down into months, and heres what it shows.

Since 1975, the gold price has tended to drop the most in March. The daily chart above shows April might offer a slightly lower overall price, but history shows March is the month gold falls the most and is thus one of the best times to buy.This trend does not apply to silver.

While the silver price is typically flat in March, the best month to buy is June, followed by October. The wisdom of buying in June is further supported by the daily chart above.

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Gold Prices Could Continue To Advance

On April 10, 2016 gold futures rose to the highest in almost three weeks, thanks to declines in the dollar and speculation that the Federal Reserve would be slow to boost interest rates. The increase aligns with Barrons prediction that gold will trade in the $1,200/oz and $1,300/oz range for 2016, with gold prices increasing over the course of the year. George Milling-Stanley, head of the gold strategy team at State Street Global Advisors, recently said that he would like to see gold go up even higher, up to around $1,350 and $1,375 by Christmas.

Is Gold A Good Investment Now

Gold can be a good investment asset to have as part of a balanced portfolioâ. Gold boasts some of the highest liquidity in the commodity markets and has more often than not increased in value over time.

If you were to invest £1,000 into gold 30 years ago, it has since then increased by over 500%. Meaning that your original investment could have been worth over £5,000. However, if we know anything about financial markets, itâs that past performance is not an indicator of future performance â although, an asset that has shown strong performance over many years could be preferred to one that hasnât performed so well.

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Cash Is Probably Safer

At the end of the day, cash is likely the safest of the safe-haven assets you can own. If you are worried about the stock market, it’s probably better to stash some more money in cash than it is to buy gold after an already swift and material price advance. Cash won’t do much for you in today’s low interest rate environment, and inflation will eat away at its value over time, but it will keep you from losing money if the stock market falls sharply. And if a bear market does show up, you can put your cash cushion to work.

As a compromise, you might consider using the money you would have put into gold to augment your cash position. That will provide extra safety now, and when gold prices have pulled back from their rapid ascent you can reconsider adding some precious metals exposure without the risk of getting caught up in the current gold hype.

Is Gold A Good Investment In 2021

Barrick Gold Corporation (GOLD) – Is It Too Late To Buy?

Gold is one of the earliest traded assets, existing long before other markets like stocks and bonds. Gold tradingâ offers lots of opportunities for investors, but it is not without its downfalls. Join us while we cover why people invest in gold, how to invest in gold and review whether or not gold is a good investment in 2021.

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Gold Bullion And Physical Gold

A popular investment product for investors of all types is gold bullion. Gold bullion is the physical metal itself in a refined format suitable for trading and can appear as gold bars, ingots or coins. Investors can usually purchase these from a precious metals dealer, bank or brokerage on the internet or in person.

Additional to gold bullion, investors can choose to purchase gold jewellery or any other physical gold products. However, there is often a price mark-up on gold jewellery due to the labour involved and retail pricing of the product.

Physical gold cannot be stored as easily as other financial assets. It takes up lots of space and comes with the additional risk of loss or theft. When buying and storing physical gold of any sort, you should ensure that you have insurance that covers it in the case of loss or theft. View our gold price chartâ for more information on trading physical gold.

Using Options As A Leverage Tool To Purchase Gld

I like using options as a possible leverage tool to purchase GLD. This can only be done in the US market .

A key reason is that it is a highly liquid ETF and hence, one does not have to be concerned with liquidity as well as spread issues .

Instead of forking out a total of USD$19,100 to purchase 100 shares of GLD, I can use a capital of USD$2,500 to purchase a Deep-ITM Call Option with a Strike Price of 170 and a duration of 160 days to expiration .

With GLD currently trading at USD$191/share, the implied intrinsic value of the counter is USD$21/share which means that I am just paying USD$4/share for time value in this scenario or paying just USD$2.50 a day as an additional cost to control USD$19,000 worth of GLD shares with just USD$2,500 in the capital.

At the end of 2020, if gold prices appreciate from the current level of USD$2,050/oz to Citis forecast of USD$2,300/oz or a 12% appreciation, I would expect GLD to have a similar level of appreciation from USD$191 to USD214.

This will mean that my call option, which I purchased for USD$25/share will now be worth approximately USD$44/share , implying a total profit potential of USD$19/share or an ROI of 19/25 = 76% for the trade.

My breakeven level is GLD at USD$195/share upon expiration, USD$4 above the current level.

The downside risk is of course GLD collapsing below USD$170 for whatever reason, by which I risk a total capital amount of USD$2,500 .

In this scenario, my max ROI will be cap at 19/ = 98%.

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