Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in
In the same category

This Is When You Make Your Money

IMG Auteur
Published : November 21st, 2012
965 words - Reading time : 2 - 3 minutes
( 2 votes, 3/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...

 

 

 

 

I remember one of my first big wins with a Casey Research stock, before I worked for the company. It was a junior gold stock Louis had recommended, and in less than a year I sold it for a double. It was exhilarating.


I proudly shared my success with someone at a conference a month later who'd owned the same stock. I was beaming – until he told me that he'd tripled his money.


How did he do that?! I wondered. I looked back at a chart and found the stock had briefly sold off at one point, and sure enough a triple would've been feasible if one had bought during that window. He did.


Last week's abrupt and unexpected sell-off in many precious metals stocks was a smaller version of that same opportunity.


While in the big scheme of things last week's 8.2% sell-off in GDX (Gold Miners ETF) was mild, and prices could certainly trend lower before bottoming, buying during dips and corrections can mean the difference between a double and a triple. Or a double and a ten-bagger. What it requires on your part is a well-researched conclusion that the bull market for precious metals and their stocks isn't over.


Here's a practical guideline. Buy gold anytime it drops by 12% from an interim high. This is the average correction from any big spike you'll find on an annual chart. For example, gold peaked at $1,781 on February 28 this year (London PM Fix price). If you followed the 12% correction rule, you would've bought at about $1,567. While gold fell as low as $1,540, you'd be sitting on roughly a 9.3% gain today. And your entry point would've been made with much less risk.


The 12% guideline doesn't always work because the metal doesn't always fall that much, but there's usually at least one of these opportunities every year. There have also been numerous corrections of between 7% and 8%, so that's another level to look for.


Here's what buying after significant declines could mean to you. If you need to sell some ounces when gold is at, say, $2,500, your gain – if you bought at $1,800 while the metal was surging – would be 38.8%. But buying at $1,567, during the sell-off, would yield a profit of 59.5%. That difference more than makes up for the tax bill.


I know many readers of this publication already practice buying the dips. I also know that some don't. For both groups, you might find my conversations on this topic with bullion dealers last week very interesting. We talked about the sell-off, the reactions of bullion investors to Obama's re-election, and the so-called fiscal cliff. I want to share their comments, which you'll see share some common themes…


  • Border Gold told me that a lot of buyers had come into the market over the past couple of weeks, and further that there's "not much selling." They also "put together a few larger deals for American customers… clients are looking for alternative assets to equity markets, especially in light of Obama's plans to boost capital gains and dividend taxes."

  • A metals trader at EverBank said that "volume definitely increased." He indicated that the number of gold ounces purchased roughly doubled in the week after Obama's re-election.

  • The Coin Agent reported that sales are up about 30%, along with the size of orders. They noted that "a lot of sales are from first-time metals buyers."

  • Miles Franklin told me their call volume doubled last week. They also received several seven-figure orders immediately after the election.

  • Asset Strategies International said that while they saw a clear uptick in sales, they're also witnessing a new trend… "We have clients selling their metals to pay a lower tax rate now, and then re-purchasing them at a new higher cost basis" [the 30-day "wash rule" for stocks does not apply to physical commodities]. It isn't just a concern about the fiscal cliff, either: "Clients are very concerned about the future of the country. They know the debt will never be repaid and that there will be consequences."

  • GoldSilver.com says that "customers are more savvy these days – many know to buy the dips." Purchases jumped when gold briefly dipped below $1,700 earlier this month.

  • Our own Hard Assets Alliance reported that new deposits the week after the election were the second highest since inception, and purchases the third highest. Interest in HAA has been consistently growing since its founding, surely one reason being the fact that a client can buy, sell, and store physical metals as easily as any ETF, but with the security of knowing he owns – down to every single coin – all the metals stored in his name. Not only that – the Alliance also offers a variety of international storage locations, including London, Zurich, Melbourne, and now Singapore.

  • And the response has also been very strong to our offer on a discounted fractional gold coin in the current issue of BIG GOLD. If you're interested, they've still got coins available – there's no minimum and it comes with free shipping, making your total cost lower than buying a one-ounce coin. It's a very attractive deal that you won't find elsewhere, and a fractional coin will someday be very practical for smaller, day-to-day purchases.

I think those who've been buying recently will be well rewarded by the time this cycle is over... certainly more than those who tend to buy when prices are rising.


No one knows with certainty what the future holds. But our research, along with some clear lessons from history, tells us that precious metals are not only a good place for profits, but a must-own asset class.


Don't fear the sell-off. It's times like these when we make our money.

 

 



Companies Mentionned : Bullion | Metals X |
Data and Statistics for these countries : Singapore | All
Gold and Silver Prices for these countries : Singapore | All
<< Previous article
Rate :Average :3 (2 votes)
>> Next article
Jeff Clark is the editor of BIG GOLD, a Casey Research publication focused on the safest ways to profit from the current bull market in gold.
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Gold: April 2015 Update
30 Marovertheedge
"I have been invited to speak at the Mines & Money Mauritius Conference in June 2015 again. If you would like to join you can receive 25% off your ...
Greece Needs the Magic Formula t...
30 Marovertheedge
Wow dude. "Idiocracy" is obviously not just another dumb-ass movie. I admit that I should have recognized your devotion to Brawndo (it has ...
The Finanser Interviews Jon Matonis
29 Marovertheedge
"In late 2009, I got introduced to Bitcoin by a random email from Satoshi Nakamoto. I didn’t give it much thought at the time and then 3-4 months ...
Gold Effect on Mining & Shale Wa...
27 Maruser4779-1
A jumbled and rambling article, seasoned with hyperbolic rant, but redeemed by interesting information. So 3/5. A good editor could turn this into ...
Oil Surges, Gold and Silver Spik...
26 Marovertheedge
"That a country would choose to directly intervene militarily in the affairs of another country is a dangerous precedent, ..." Precedent?<...
Water Wars Loom Over California ...
26 Marovertheedge
Ellen Brown should stick to what she understands versus geology, hydrology and financially available technology. Example: "With discussions...
Kicked to the Curb
24 MarFalconflight2
I'm both ashamed and disgusted by the government 'of, by, and for the people,' every bit as much as I am ashamed and disgusted by the People.
The Silver:Gold Ratio, 1687-2011
24 Marconey1
"large new deposits of silver were found"? So what was found by ECB that enabled them to cough up an extra trillion euros for failing European econ...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Trevali Mining(Cu-Le-Zn)TV.TO
Commences Mining at Caribou Zinc Mine in Anticipation of Q2 Mill Commissioning
CA$ 1.09+6.86%Trend Power :
Corporate news
Rockcliff(Cu-Ni-Pl)RCR.V
Solvista Gold Corporation and Rockcliff Resources Inc. Enter Into Letter of Intent Regarding
CA$ 0.04+16.67%Trend Power :
Corporate news
Pele Mountain Res.(Ag-Au-Cu)GEM.V
Executes MOU with Major Chinese Rare Earth Player to Pursue Opportunities of Developing Rare
CA$ 0.05+66.67%Trend Power :
Corporate news
Duran Ventures(Ag-Au-Cu)DRV.V
Signs Memorandum of Understanding for Tolling Operation in Peru
CA$ 0.02+50.00%Trend Power :
Corporate news
Waseco Res.(Ur-Au-Gems)WRI.V
Announces Non-Brokered Private Placement
CA$ 0.04+0.00%Trend Power :
Financings
Metanor(Au-Pa-Pl)MTO.V
Intersects 8.64 g/T Over 5.8 Meters at Bachelor Mine
CA$ 0.04-11.11%Trend Power :
Corporate news
Hudson Res.(Ag-Au-Cu)HUD.V
Reports Robust Preliminary Economic Assessment (PEA) for Specialty Alumina Production From th
CA$ 0.50+0.00%Trend Power :
Corporate news
Western Copper(Cu-Le-Zn)WRN.TO
and Gold Provides Casino Update and Reports Year-End Results
CA$ 0.58-3.33%Trend Power :
Corporate news
Western Copper(Cu-Le-Zn)WRN.TO
and Gold Provides Casino Update and Reports Year-End Results
CA$ 0.46-2.09%Trend Power :
Corporate news
Corona Gold(Ag-Au)CRG.TO
Provides Update on Voluntary TSX Delisting and Application for Listing on Canadian Securities
CA$ 0.31+3.33%Trend Power :
Corporate news
Comments closed
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.