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« Soon Be Christmas | Main | Agnico-Eagle Mines Limited: Ready to Fly? »
Friday
Dec032010

‘BP’ Investing: The Only Way to Go

By Jeff Clark, Senior Editor, BIG GOLD

Gold and Gold Stocks 04 Dec 2010.JPG




Wanna know how to make a small fortune in the stock market? Start with a large fortune and buy stocks based on your emotions. Wickedly funny. Disastrously true. Letting your emotions determine the timing of stock purchases means buying when everyone around you is buying – that’s why you feel so certain – and ensures you will enter near an interim top.

We prefer a “BP” (Big Picture) approach to buying. As an example, at the height of the recent Gulf oil disaster, wild speculation of British Petroleum’s ultimate demise drove the stock price down in a wave of panicked selling. To use a classic Doug Casey idiom: there was blood in the streets on this stock. That is the time to buy, and those that kept the big picture in mind have profited nicely.

If you were peeking over my shoulder as I reviewed reader email, you'd eventually notice that when it comes to complaints, most center on one thing: losses on stock positions. And the circumstances for the losses consistently boil down to these: bought just before a downturn; panicked in a correction and sold for a loss; bought too much; or expected prices to head for the moon by Tuesday.

Emotional buying and impatient owning. These unfortunate patterns of investor behavior are all too common and underscore the importance of following a disciplined plan of accumulation.

Which leads to this: understanding my philosophy, and that of Casey Research in general, will help you interpret our buying recommendations and stick with the plan. It's actually very simple:

 We're investing in the big picture and for the long haul.

Although we monitor the precious metals markets daily, when it comes to putting our money on the table, it's done with the big picture in mind. What are these major themes? Our research points to massive and ongoing economic, fiscal, and monetary forces that are not only positive for gold but make owning it essential. So that's where we're placing a large chunk of our chips at this point in the cycle.

How do you make the highest returns with gold stocks? Don’t panic and sell if they drop. Maintain an appropriate level of exposure to them – enough to make a difference in your life if we’re right, but not so much that you are wiped out if we're wrong. And don’t let short-term market noise sabotage your plan; stay focused on the long-term trend.

Why the reminders? Because after watching our positions run higher over the past few months, it's perfectly normal to expect them to take a breather. And we want to buy when they're tired from running, not when they’re in the middle of a sprint. 

Here's some big-picture perspective. This chart shows the percentage gain in gold and gold stocks since the bull market began in 2001 (based on beginning-of-month prices).
 


You can see two obvious takeaways. From 2001 through 2007, gold gained 220% while gold stocks, represented by the HUI index, returned 945%. Think about that… gold producers, as a group, returned over ten times your money in six years. That represents more than 4-to-1 leverage to gold.

Conversely, in the 2008 meltdown, gold stocks lost roughly a third more than gold itself. And if you study the chart, you'll see plenty of other times where gold fell and gold stocks fell further.

The point: spotting a bargain means understanding prices within the context of the overall trend. Gold stocks are trending up, and will continue to do so, but there will always be corrections along the way. And the investment advice that flows from this outlook is:

 Buy gold stocks when they're correcting, not when they're advancing. And be patient. There’s no rush, as the mania still lies ahead.

[Jeff Clark keeps his finger on the pulse of the gold and silver sectors, resulting in handsome profits for his BIG GOLD subscribers: returns of 43.1%... 56.8%... even 187.9%. Read all about Jeff’s secrets for picking the best stocks at the right time – click here for details.]



Meanwhile back at the ranch during our knockabout sessions we have toyed with the idea of running an Accumulator whereby we make a trade and then use the total proceeds for the next trade and so on. So the stake and any profits are rolled into the next move, if you would like to comment on this idea, then please click here.

Over in the options trading pit the team have updated the progress chart to include closed trades, now 53 winners and out of 55 trades, having been stopped out of a trade with a profit of 41.84% made in just 8 days.

We currently have a number of open positions which we are pleased to say are all in positive territory.

sk chart 19 Nov 2010.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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Reader Comments (11)

This is just an opinion. Gold is good and should still have a long way to go. Silver? well it should be good but there is a lot of silver stuck in ETFs now, but Nuclear in the form of Uranium by way of the mining stocks now that is interesting.
I seperate emotion from gut feelings since gut feeling are the subconscious total of all previous investment information whilst emotion is an immediate reaction. Add Gut feelings to the facts perceived and uranium seems very positive. So if you want to start this crazy accumulator then maybe it should be in a specific area and on a 50% basis and not 100%. Just an idea from an old 'un. Roger.

December 4, 2010 | Unregistered CommenterRoger Levinson

I agree with your analysis of uranium. IMO nuclear energy is the logical choice for energy. Where our difference of opinion comes is silver, I consider ETF's to be nothing more than a paper promise of the silver you own. I own physical Gold, as well as Silver. Physical Gold for large purchases in the event the fiat system crashes, however for smaller purchases of needs/wants silver is more practical. Not to mention the properties of Silver that allow it to be melted down and used as projectiles. We all know that the only way to X out the politicians oh I mean the wherewolf is with a silver bullet.

December 4, 2010 | Unregistered CommenterVincent

Just a small observation. The subject heading is spot on. Unfortunately, after reading only a few lines, I reached what I expected, it was not seeing the 'big' picture.

For example the Gulf Oil disaster was only a very small part of the big picture.

We here focus on the precious metals, but it could be any segment of the market. Then we look at close events to see how they may indicate cause and effect of where it may be pointing in order to position our money.

But for every effect there is a cause, and every effect becomes the cause of another effect. They are all part of the whole.

Hope I am not losing too many of you, I am trying darned hard to keep it simple.

There is an over all objective. This world is being moved by very powerful financial forces. Money is power, once you have all the money you would need in a thousand lifetimes, money in itself is of little focus. The motivation is power, influence, a feeling of some fulfillment at having reached an objective.

Those at the pinnacle of this vast wealth are those who would make Bill Gates, and Warren Buffet appear paupers.
No, do not look for their names in 'Forbes'. They are way beyond such accolades and displays of their wealth. And for good reason.

They have a vast network as front men to ensure their objective for our world is kept on track and attained, the objective has, and will continue, to survive their individual deaths, because considerable time is needed. Many within the network, especially in the lower echelons are as unaware as you that they are part of it.

So what is the point being made. It is that the objective is the BP 'big picture', and all these little pieces of the jigsaw upon which we tend to focus completely out of proportion to the whole, are just that.

Therefore, first consider the real BIG PICTURE, then see where the event fits in order to make that picture. If an option is presented, which will take us nearer to completing that picture, or away. Rest assured, the latter will lose out.

Oh, in case you are wondering what is that BP. Well they have told us, and shown us, often enough

It is - ONE WORLD, ONE DREAM. We are right on target, but will not be fully reached in your lifetime no matter how young you are. (unless someone comes up with a super longevity pill)

December 4, 2010 | Unregistered CommenterRay Newton

Tri-lateral commision, Bilderberg group, Rockerfellas. Research them, make yourself knowledgable to their actions and Listen to their vocabulary and learn to read between the lines. Boycott and protest their every idea

December 4, 2010 | Unregistered CommenterVincent

> Tri-lateral commision, Bilderberg group - 2nd class fiction. How about this for golden news?

China’s gold imports up 5x from 2009

http://jubakam.com/2010/12/chinas-gold-imports-up-5x-from-2009/?utm_source=WEEKEND+JAM%3A+Saturday+Evening+Quarterback&utm_campaign=ef9e912bee-RSS_EMAIL_CAMPAIGN_JAM_WEEKEND&utm_medium=email

China has treated data on the country’s level of gold imports as a state secret—until yesterday.

And the newly public data shows that China is on a path that would have the country overtake India as the world’s largest consumer of gold.

Think this might be bullish for the price of gold and gold stocks?

In the first ten months of 2010 China imported 209 metric tons of gold—that’s about five times the 45 metric tons analysts think the country imported in 2009.

China is already the world’s largest miner of gold. Total gold demand in China hit 450 metric tons in 2009, the World Gold Council estimates. Total gold demand in India was 612 metric tons in 2009.

See jubakam.com for more details.

December 4, 2010 | Unregistered CommenterBC

Just a FEW (of many) THINGS TO PONDER

Is it important that the World's top bankers (used to be round a table in London) decide what price to 'fix' the trading of gold (at least the 'settling' price?
each day - twice a day.

What is more important is the WHY? Why just gold (as far as I am concerned it is rhetorical). If you know -fine. If not, then poke around until you figure it out applying a reasoning, open, mind.

Why London? Does that mean the British decide the price of gold, or dominate the gold market? {still rhetorical)

Who 'OWNS' the 'City' of London? Why must the Queen ask permission to enter 'The City'?

What would you say if all the supermarket chiefs in your country got together and decided to agree to fix their prices?

Assuming all those 'facts' and 'figures' quoted in the previous post were correct, how, and why, did China become
as is claimed, the world's largest gold producer. It used to be South Africa, yet South Africa has never been among the world's richest, or even leading, countries?

Incidentally, my reason for using the 'assuming' is based on the fact that it is known the gold market is the secretive of all markets. Nations buy, and sell, by 'proxy'
so that no one knows what they are doing. If you do not believe that, how could they have (quote) '...China has treated data on the country’s level of gold imports as a state secret—until yesterday.....'

As for 'The World Gold Council'. Take what you read with a pinch of salt. I, personally, used to receive their publication many years ago. I saw something in their 'facts and figures' on a nation's holdings that I queried. They responded by admitting that they have to accept whatever they are told by a nation as they have no means of checking.

The World Gold Council is for 'Dummies'. But if you believe otherwise, be my guest.

Don't see nations, no matter what rhetoric they splatter you with, as being not under one ultimate banner of control.

Let me give you an analogy, one of many I could have used.

Many allied commanders, on the same side, disliked each other, to the point where one could wonder are they working for the enemy. It could get confusing. Patton and Montgomery
disliked each other, and they both disliked Eisenhower.
How many enemies of his own nation did MacArthur have?

Now they were all fighting a common enemy, and men, the poor Joes under them, were being maimed and blown to pieces.

Yet, their egos were controlled from somewhere in the shadows, way behind that of the so called Supreme Commander
Eisenhower. And the goal was achieved.

If those individual commanders on whom were the action focused, had not been kept in line by some 'unseen power' and it certainly was not the president. (We have seen how he can be dealt with if he ad libs from the script) do you think the war would have ended the way it did?

The enemy could have sat back without firing another shot, and watched the allies kill each other.

Same with nations today. Their divisiveness is permitted for a reason, but it is controlled, because it is the only way to achieve the main goal - THE BIG PICURE.

NOTHING is all what it seems. Deception is claimed as being the key to winning. Deception, in politics, never sleeps. That is one of the reasons we have media round the clock.

Enough for now, from me.

December 5, 2010 | Unregistered CommenterRay Newton

Should have said 'deception in politics AND THE MARKETS never sleeps.

December 5, 2010 | Unregistered CommenterRay Newton

Team,

We are pleased to see this banter, without it theres not a lot of point in hosting this site, so it is very much appreciated.

Thanks a million,

Bob K

December 5, 2010 | Unregistered CommenterGold Prices

Yes Bob, everyone has a point of view and shoulod be free to express it. I am not saying mine is correct, all I know is that it is correct to me until someone puts up a darn convincing argument that it is otherwise.

I am always ready to be convinced I am wrong, or have my own view further strengthened by agreement or by poor attempts to find and substantiate an opposing one.

December 6, 2010 | Unregistered CommenterRay Newton

Hello Ray.

I was the individual that posted the question about the possibility of another World War being imminent. Most people didn't want to hear it, but I think, more than ever, it is becoming a real possibility.

At the very least, anarchy in the USA could become a very real possibilty ...

Who knows what's gonna happen, but what I do know is that I just go to work every day trying to pay the bills - I haven't, YET, been pushed too far to protect THAT which I believe in ... so far it hasn't gotten that bad, but there is no going back to the golden days of post WWII.

Folks, have a good one ... l8r!

December 8, 2010 | Unregistered CommenterTJ

TJ Remove that 'fear' completely, there will be no 'world war three in the way your fears envisage. On that you can rest assured. There are a number of reasons for this, but there is one that enough in itself.

We are already at war, and have been for a very long time. You, and most people see it as just economic problems here there and everywhere, mostly unrelated and down to irresponsible individuals or governments.

They are all related to pushing our world to where it can be more integrated, as in unified in one more easily managed 'package'. This is the BIG PICTURE that most people do not see. It is the one that is governing our lives.

All this 'terrorist' nonsense, is all part of it.

Too much to go into in detail. The markets will continue to reflect responses to the events (causes and effects) that
occur in this process.

Major wars of nation against nation where both sides have nuclear weapons are most definitely out. The damage can't be contained and those that cause wars, who before were able to keep well away from harm, can no longer do so.

So, they will make sure they don't happen - no matter what the rhetoric. Stop thinking nations think WORLD. THEY DO!
And so does all BIG MONEY!

Keep smiling, it is hard to have fear when you can smile. And you can't think clearly when you are frozen with fear.

Opportunities abound, everywhere. It's a great time to be alive.

December 8, 2010 | Unregistered CommenterRay Newton

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