{"id":23717,"date":"2011-09-08T08:30:41","date_gmt":"2011-09-08T12:30:41","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=23717"},"modified":"2011-09-08T08:30:41","modified_gmt":"2011-09-08T12:30:41","slug":"when-nine-gold-stocks-just-isnt-enough","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/09\/08\/when-nine-gold-stocks-just-isnt-enough\/","title":{"rendered":"When Nine Gold Stocks Just Isn\u2019t Enough"},"content":{"rendered":"

By Dr. Alex Cowie<\/strong> <\/abbr><\/p>\n

Kris Sayce isn\u2019t the only guy around here who loves gold. We love it too!<\/p>\n

But aside from physical gold, the other way to get exposure to the shiny metal is to buy gold stocks.<\/p>\n

(In fact, as editor of Diggers and Drillers<\/em>, precious metals make up most of the stocks we\u2019ve tipped. We\u2019ve got nine on the go at the moment!)<\/p>\n

 <\/p>\n

But it hasn\u2019t been all good news for gold. Overnight, gold and silver took a bath. Gold lost $100 in 24 hours.<\/p>\n

So what\u2019s going on? Is this \u2018top-of-the-market\u2019 stuff? Should you sell your gold and silver?<\/p>\n

In a word\u2026 No.<\/p>\n

Gold may have lost $100, but taking a step back and looking at the big picture, you can see it\u2019s no big deal. Look at the chart below. I\u2019ve circled the latest drop to put it in context:<\/p>\n

\"Gold<\/a>
\nCLick here<\/a> to enlarge<\/div>\n

 <\/p>\n

Source: Stockcharts.com<\/em><\/div>\n

 <\/p>\n

Gold is still flying, and in a strong uptrend. Any pullback we may see in the next week or two will be one of those \u2018dips\u2019 we are meant to buy on.<\/p>\n

 <\/p>\n

The German What?<\/strong><\/div>\n

 <\/p>\n

The world hasn\u2019t changed overnight. The financial system is still in a mess. European banks are looking very Lehman-like, and it seems only a matter of time before one falls over or gets bailed out.<\/p>\n

Gold is insurance against this happening. In US terms it has gained 27% in just two months. This is just not normal!<\/span> This is a clear barometer that we are heading into the danger zone.<\/p>\n

So what caused gold to fall off a cliff last night?<\/p>\n

Well, gold\u2019s latest ascent has been violent. We have seen massive swings up and down. In a few weeks the gold price has gone from $1,900 to $1,700; then back up to $1,920, and now down to $1800.<\/p>\n

Last night\u2019s fall in gold had a few triggers.<\/p>\n

The main one was the German Constitutional Court. It ruled it OK for the German government to spend taxpayers\u2019 money to bailout Greece. Although it said any further bailouts should<\/em> be referred to the German parliament.<\/p>\n

So, with the Eurozone saved again, gold sold off. The Eurozone lives to fight another day.<\/p>\n

But in reality more future bailouts\u2026 means more future debt.<\/p>\n

And more debt means higher gold prices.<\/p>\n

The same goes for the other reason behind gold\u2019s selloff last night. There were rumours U.S. President, Barack Obama will announce a grand job-making scheme tonight \u2013 to the tune of $300 billion.<\/p>\n

But read that $300 billion figure as $300 billion of debt. Fight debt with debt? It seems they\u2019ll never learn.<\/p>\n

And again \u2013 that should mean higher gold prices.<\/p>\n

 <\/p>\n

Leverage to a higher gold price<\/strong><\/div>\n

 <\/p>\n

The way we see it, pretty much every time a central banker or government leader opens their mouth it gives us reason to buy more gold.<\/p>\n

Now, for all the talk about people rushing to buy gold\u2026 and gold being in a bubble\u2026 so far we haven\u2019t seen any evidence of it. Here\u2019s a personal example\u2026<\/p>\n

Earlier on in the year we bought precious metals from a bullion dealer in the city. It was almost as easy as walking in with cash to buy a TV or a pair of shoes.<\/p>\n

But to get the cash we first had to pay a visit to our friendly neighbourhood bank. That\u2019s not so easy \u2013 especially if you\u2019re asking for a larger-than-normal amount. Don\u2019t forget, banks don\u2019t hold much cash on the premises!<\/p>\n

Part of the ritual of getting our hands on our own cash was the teller wanted to know what I was withdrawing the cash for. When we told her it was to buy gold and silver, we could have sworn she thought we were speaking Swahili.<\/p>\n

Not only that, she then tried her hardest to get us to make an appointment with the branch financial planner!<\/p>\n

No thanks.<\/p>\n

But buying physical gold is only half the strategy. It\u2019s the conservative way to cash in on the debasement of paper money.<\/p>\n

But, if you want to make really big gains from the rising gold price\u2026 in other words, leverage your exposure to the gold price, the best way to do it is to invest in gold and silver stocks.<\/p>\n

It doesn\u2019t matter if they\u2019re explorers or developers. Both allow you to amplify your gains from a higher gold price.<\/p>\n

The great thing is, although gold and silver stocks have made good gains, it has been from a low base. That means there\u2019s still plenty further for them to go\u2026<\/p>\n

And it\u2019s why, even with nine precious metals stocks in the Diggers and Drillers<\/em> portfolio, there\u2019s still room to add more.<\/p>\n

Regards.
\nAlex<\/strong><\/p>\n

When Nine Gold Stocks Just Isn\u2019t Enough<\/span><\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The world hasn\u2019t changed overnight. The financial system is still in a mess. European banks are looking very Lehman-like, and it seems only a matter of time before one falls over or gets bailed out. Gold is insurance against this happening. In US terms it has gained 27% in just two months. This is just not normal! This is a clear barometer that we are heading into the danger zone.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-23717","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23717","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=23717"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23717\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=23717"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=23717"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=23717"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}