The chart below, courtesy of Bloomberg was sent to us by one of our very kind readers. It’s at times like this we find ourselves in great difficulty as many around us capitulate and dump their holdings. Each to their own as they say.
Our thoughts, for what they are worth are as follows;
On the downside, if gold prices fall below the $1500/oz level and stays there for a sustained period then a number of producers will operating at a loss, which will in turn have investors running for the hills. We also have the prospect of those investors who are suffering at the moment heading for the exit as soon as things improve, adding to the downward pressure on stock prices.
On the upside, the fundamentals haven’t changed in that money printing on a global basis continues unabated; you know the story along with all the other reasons to own gold and their associated stocks.
However, we have all got to do what we think is in our own best interests and suits our objectives, aversion to risk, cash position, etc., and it is different for everyone as we are all unique individuals.
My own strategy remains pretty much unchanged other than the recognition that choosing good quality stocks, when the time is right, is now more important than ever. The same goes for options trading, with gold and silver becoming ever more volatile the oscillations in the options market will become more dramatic. This is terrific when you get it right, but horrendous when you get it wrong.
So, take care and proceed gently, don’t be bullied or cavalier in these treacherous waters and always retain enough in the way of funds to fight another day.
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