Gold Price Stinks — Is the Gold Bull Market Over Before It Even Begun?
There. I said it.
Surely some are thinking it. I just went and called it what it is.
Right now, it sucks just a little bit to be in gold.
I mean…just look at the dips.
Down almost 4% in the past two weeks.
If you look back to January, the price of the metal is down even further, around 9.6%.
And then if we go way back to the August high last year, the price of gold is down a whopping 14.56%.
To make matters worse, gold has dropped down to a key level of technical support I’ve been following…
Is the proclaimed gold bull market over before it even begun?
Nope. But you need to think about the bigger picture…
Gold price sinks while stocks stonk
Markets overnight threw a tantrum.
Is this sell-off ‘the big one’?
To unseasoned investors, it may certainly feel like it.
Only on Wednesday was I admiring the new highs the Dow Jones Industrial hit on the back of Powell’s pledge to have low interest rates until official inflation hits 2% in the US.
What did stocks do? Scream higher…
Well for 48 hours at least.
There was the Dow Jones Industrial Average dancing with yet another all-time high — almost cracking 32,000 — and then overnight trading changed that. Aussies woke to news the Dow dropped a whopping 560 points overnight.
The tech-heavy NASDAQ had its worst day in four months wrote ABC News.
This is something investment Editor Greg Canavan pointed out this morning in a phone call. Saying that markets took an absolute beating overnight. But that perhaps, an overdue 10% — or even 20% — correction isn’t a big deal.
With Greg suggesting that this isn’t the big one everything thinks is coming. Rather it’s a case of the heat coming out of the market.
Odds are the Aussie market is going to take a walloping today as well.
This means that gold isn’t the only thing taking a beating right now…
Think long term, not short term
I’ve been writing about gold for over a decade now. Investing and trading in it for even longer. So I understand how easy it is to get spooked about a big price fall.
In fact, the 14% dip in the gold price over the past six months is starting to shake some investors’ views on the metal. Judging by the questions I’m seeing from subscribers of Strategic Intelligence Australia, some are starting to ask if they should just cut their losses and move on.
Well, I’ll tell you what I told them.
There’s a huge problem with watching gold’s daily move prices.
It’ll rattle you.
Of course, you should absolutely take an active approach in managing your investments. But investing in bullion isn’t a day-to-day strategy. Unless you’re a day trader, short-term gyrations do nothing other than rattle long-term confidence.
And investing in any type of bullion — be it gold, silver, or platinum and palladium — is best thought of as a decade-long investment.
Watching the daily price moves of the metal will keep you on the edge of your seat. Sometimes daily dips give you an itchy trigger finger…and you risk cutting your investment too soon.
Let me show you what I mean.
US dollar gold price Daily chart
Source: Trading View
Don’t get me wrong, the recent fall in the gold price feels big in context of how high the metal has moved. Falling from US$2,080 to today’s US$1,770 is a US$306 fall per ounce. It feels big.
However, if you look at the chart above, you can see that in the last five years, the yellow metal has made a couple of pullbacks of equal or greater size.
Yet all that time the yellow metal has remained in a bull market.
Investing in gold isn’t about capturing a few bucks here or there. It’s a strategic investment to protect your wealth in the long term. Precious metals act as a buffer against inflation.
As central banks around the world devalue their currencies with low interest rates and governments increase their deficit spending, gold is an enduring form money that can withstand these erratic decisions from those in power.
You need to be patient and weather the pullbacks.
Make no mistake, I believe gold is moving higher. But it won’t go up in a straight line.
Until next time,
Editor, The Daily Reckoning Australia
P.S: Why Australia is set to become the next ‘gold epicentre’ — which could result in a HUGE spike in Aussie gold stock prices. Click here to learn more.