Gold - did you know?

Have I Missed the Gold Bull Market?



"It never was my thinking that made the big money for me. It always was my sitting." - Jesse Livermore.

Jesse Livermore suggests that to make money, big money, you have to be right and sit tight. This is the kiss of death for most traders and investors.

Often being right is doing something that the masses deem foolish, stupid, unpatriotic — you name it. To be right, investors face isolation, ridicule and labels. This emotional pressure is simply too much for most individuals. The drive for social acceptance from the group is very strong in humans. It's easier for the psyche to get slaughtered as a group than to stand alone and be right. Even for those who have the discipline to stand alone and be right, it is often very hard to sit tight long enough to make the really big money.
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In recent years, precious metals have exploded in price. For example, gold has risen from an approximate value of $250 per ounce in 2001 to a price of over $1,100 per ounce today, an increase of over four times in USD value. Silver is similar rising in the same time frame from around $4.50 per ounce to over $17 per ounce today.

This DOES NOT mean that the bull market in gold and silver is by any means over. In fact, in my view it is JUST THE BEGINNING of what will be a multi-multi-year upward move in this market sector.

During the 1960s, the astute student of history and market observer could easily see an inescapable reality looming ahead, which is very similar to today’s current environment. With a vastly over-inflated US dollar unsustainably pegged to gold, it was a great opportunity for the wise person to carefully and quietly position them-selves for the huge move that lay ahead.

Eventually, in August 1971, President Nixon did the inevitable and broke the pegging of the USD to gold. From that time up to the early 1980s, the gold price increased from $35 to $800 plus per oz, an approximate increase of over 2,000%. People in their wildest dreams could not have imagined a three-digit gold price following a four decade period of two-digit gold prices.

By 1975 gold had already been moving up dramatically for four years. By now many had multiplied their initial investments and had successfully emerged as a result of their clever and careful positioning beginning in the late 1960s and early 1970s. This was stage one, but most just didn’t see it.

It wasn't until mid-1975 that the general investing public for the first time started to notice and take this sector seriously. And so began the second stage. This period was just the start of the dramatic bull market that would follow which was driven by the mainstream investor.

There are many correlations of the 1966 to 1974/5 period which marked the first up leg that went unnoticed by the general investor. Today's commodity bull market started in the year 2000/1 to 2008/9 period. The start of the second up leg had an 8-9 year time frame much the same as in the mid 1970s. They say history doesn’t repeat itself, but it sure does play a similar tune.

YES! The Bull Market in Gold and Silver of the 2000s will OUT-PERFORM MANY TIMES OVER the Bull Market of the 1970s.

Some thoughts for you to consider:

1) Remember, investing is not just buying an asset. It’s also getting involved in a business that benefits from the price of a rising asset!

2) Don't become fearful or desperate when it comes to investing. Control your emotions. Be brave when others are fearful, for fear is a great enemy to one’s self preservation.

3) Taking time to study history gives you the "jump on the crowd." History repeats. Consider King Solomon who said, "There is nothing new under the sun, that that is, is that that will be again." This is particularly true with markets and the emotional reactions of the crowd.

4) When "inescapable realities" or “great resistances" are looming, they are very often accompanied by "great opportunities."


Until next time,

Simon Heapes






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