Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold, Investor Doubt And Uncertainty Are Commonplace

Commodities / Gold and Silver 2010 Apr 01, 2010 - 02:48 AM GMT

By: Aden_Forecast

Commodities

Best Financial Markets Analysis ArticleMost people seem to be confused these days. This not only applies to investors, but to everyday folks across the spectrum. People hear one thing, but they see another. Doubt and uncertainty are, therefore, fairly common.

This is not unusual. The times are uncertain. Unprecedented historical events are taking place. And even though many aren’t aware of the details, a majority of nearly 90% feel that the U.S. government is broken. They know things aren’t right, so this leads to confusion.


We know by your letters that’s how some of you are feeling and we totally understand why. This tells us that it’s a good time to stand back and review some basics…

TRADERS VS INVESTORS

Many of you, for instance, want to know when to buy or sell metals or gold stocks. That’s especially true now that the markets have been correcting. What to do, should I sell and so on. These questions can essentially be categorized as trading questions, so we’ll start with that.

The simple facts show that sooner or later, most traders end up losing money. Sure, there are some who follow the markets daily, they’re nimble and smart and they make money, but these are a very small minority.

Whatever happened to all of the hot shot day traders who were making bundles during the tech boom?

The reason you haven’t heard about them over the past 10 years is because there aren’t many. From what we’ve heard, most of them lost nearly everything. So was it worth it? No.

We know trading can be fun. If you know what you’re doing it can be profitable. Some investors are very good at it and they provide trading services, which are very worthwhile.

But for the majority of investors we advise investing based on the major trends. These are the trends that last at least a year and sometimes many years. That’s where the big moves take place and it’s where you’ll make the most money over the long haul.

To do this, however, you have to be patient. And you have to understand that there will be ups and downs (corrections) along the way. No market goes straight up, but if a major trend is up, you will profit. As legendary investor Warren Buffett has often said, you only need to make one or two good trades a year and that’s enough.

GOLD IS A GOOD EXAMPLE

Gold provides a good example of this. It started moving up in 2001 after bottoming near $250. It’s now above $1100 and it’s been the best investment of the decade. Does it really matter if you bought it at $350, $500, $800 or more? No it doesn’t.  Was the price too high near $1000 when India bought gold from the IMF?  No it wasn’t.

The main point is, the major trend is up, meaning it’s going higher probably for many more years to come. Ideally, you’d want to buy new positions during a downward correction, which is what we strive to do, but it’s really okay to buy at any time. That’s what we mean by taking a big picture view and it applies to all investments that are in major uptrends.

Remember, markets are always looking ahead. They’re not interested in what’s happening today or yesterday. That’s why it’s most important to let the markets tell you what’s likely coming up, which is what we focus on, and then go with it. All of the reasons why will always become obvious in time.

Of course, the news is important and at times it’s very important.  There are also times, however, when it’s a non-event.  But if you make investment decisions based solely on the news instead of the market action, you generally won’t do well.

To make our point, we’ll use the economy as an example since it’s currently the cause of a lot of this confusion…

IT’S A RECOVERY, AFTER ALL...

We know that many people don’t believe this but the economy is recovering. We also know that there are many things wrong with this recovery, but nevertheless it is a recovery.

The stock market has been rising for a year now. It’s been telling us that an economic recovery was coming. The stock market is still in a major uptrend and it’s now moving up again. So it’s telling us that the economic recovery is going to continue.

The index of leading economic indicators is reinforcing this. It’s been rising for 10 consecutive months. This indicates a strengthening recovery over the next six months or so. Other economic signs are pointing in the same direction.

This is one case of the market action and the news coinciding, which is ideal. But it doesn’t always happen that way. It also doesn’t tell us how long the recovery is going to last. But still, that’s the reality and we have to go with it for however long it does last.

... BUT HIGH PRICE TO PAY

We all know that this recovery is based on unsound fundamentals. Massive spending and excessive stimulus have been the primary driving factors boosting the economy, which grew at an annual rate of 5.9% in the last quarter of 2009, the largest quarterly gain in six years.

So there has been a high price to pay for this recovery. It has come about because  an unthinkable amount of debt has been taken on. Consider this…

In the U.S., it took nearly 200 years for debt to reach the $1 trillion level. Last year alone the debt was almost twice that and it’s now near $13 trillion. This happened in a relatively short period of time and all U.S. debt now amounts to about $250,000 per person.

UNSUSTAINABLE SITUATION

Is this healthy? Of course not! Experts estimate that in about 10 years just the expenses for the interest payments on the debt and Social Security will take up about 80% of all of the government’s income.

The other 20% will have to pay for everything else. So obviously this means huge debts for as far as the eye can see.  It also means that further efforts will be made to keep interest rates low for as long as possible to avoid exploding interest payments, which would rise along with rising interest rates.

In addition, inflation will eventually result due to the Fed’s aggressive monetary policies. In fact, this is already getting started since producer prices have had sporadic surges in recent months with a 17% annualized rise in January.

That’s why so many experts are pessimistic and/or uncertain about the economy’s future. The same goes for the public, and they’re right.

Nevertheless, the economy is still recovering. Even though it may not make sense or have a healthy foundation, it’s happening and as an investor that’s what we have to deal with.

CHANGE TAKES TIME

One important factor, which could partially explain why this discrepancy is currently taking place is because big changes usually end up taking much longer than you’d think.

In other words, sooner or later the negative economic fundamentals (debt) are going to catch up with reality. There will be severe consequences. But again, no one knows exactly when that’s going to happen.

The markets, however, will provide plenty of insight and we’ll take that, rather than the dozens of expert opinions out there.

Meanwhile, as an investor, try not to feel pressured. There really isn’t a hurry.

A DISCRETE BULL MARKET

Gold’s major trend has been up for nine consecutive years, yet the investing public has barely begun to invest. It’s not well known that this bull market even exists. This in itself is bullish because it means the 375% gain over the last almost decade will be pale compared to the potential this second phase of the bull market could have.

The markets are one big ball of mass emotions. And in many ways, the first nine years of the stock market’s mega bull market rise from the mid-1970s through the 1990s was similar to this bull market rise in gold.

Chart 1 shows the S&P500 from the 1974 major low to the 2000 peak, compared to the gold market from its 2001 low to the present. Here you can see the similarities of the first nine years.

In both cases, the rise wasn’t generally noticeable because another overpowering market was the main focus. In 1974-1983 the gold market was the flurry, not the stock market. Since 2001, it’s been the stock market flurry, which carried over from the tech and global boom, that has had more attention.

This is not to say that gold today is where the stock market was in 1983, ready to embark upon a mega decade bull market, but it could.  These similarities and many others suggest that gold’s bull market has much further to run.

By Mary Anne & Pamela Aden

www.adenforecast.com

Mary Anne & Pamela Aden are well known analysts and editors of The Aden Forecast, a market newsletter providing specific forecasts and recommendations on gold, stocks, interest rates and the other major markets. For more information, go to www.adenforecast.com

Aden_Forecast Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in