Gold Falls for Four Straight Days but is the Low Price a Bad Thing?

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Our favorite precious metal fell for the fourth straight day – another side effect of a strong dollar. Gold is now sitting below $800 – but is this low price a bad thing? GoldMoney.com’s James Turk weighs in on the discussion:

“Years ago Warren Buffett asked an amusing question in one of his annual letters to the shareholders of Berkshire Hathaway. He noted that he was perplexed by people’s mood swings in relation to stock prices. He wondered why people were happy when the stock market was high and somber when it was low because he believes it should be the other way around.

“To explain his point he asked the following question: If you ate only hamburgers your entire life, would you want the price of hamburgers to be high or low? Clearly, you would want the price to be low because in that way you would obviously maximize the purchasing power of your dollars. So too with stocks. When their price is low, you get more stocks for your dollars.

“I believe that this insight also applies to gold and silver. When their price is low, you are able to exchange more overvalued dollars for undervalued gold and silver. Consequently, my approach to the precious metal markets over the past several years has been based on one simple premise. Namely, continue to accumulate the precious metals month after month after month. Some months the price will be high; some months the price will be low. But consistently take that portion of your income you save every month and save sound money. Don’t save dollars; save gold and silver instead.

“Then by the time this bull market finally ends, you will have accumulated a meaningful amount of physical metal because gold bull markets span decades. Importantly, with this simple strategy you will have avoided the emotional roller-coaster ride that can come from looking at the market day-to-day and from reading newspaper headlines. Leave the daily, weekly and monthly price swings for the professional traders to worry about, and instead be a wealth accumulator, buying the precious metals month-in and month-out.”

Bill Bonner
for The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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