Are Gold Stocks Really Worth It?
In short, Gold and gold stock are on fire. The next few trading days are crucial for gold as it battles to breakout above the $1000 – $1033 level which is the 2008 high. With gold trading at this MAJOR resistance level also known as a “Pivot Point”, the danger level is higher for traders. The chances are indicating greater prices but we must acknowledge that rate action ends up being unstable and fast moving. We could see the price breakout and rally to the $1500 level within months which is exactly what are currently positioned for. However we must realize that gold can develop a double top and sell really swiftly which is why we have stops in location to shield us.
Today, gold trades at around $980. The DJIA trades at 8,500. This puts the ratio of gold to stocks at 8.6. Hence, the DJIA needs to fall to 5,292 (a 37 % drop from today’s level), gold has to rally to $1,574 (a 60 % rally from today’s level), or some combination of the two, in order for gold to be properly priced relative to stocks once again.
Use Gold In Your Retirement Plan
It needs to be a knowledgeable financial investment, while you can put cash into gold for the retirement plan, like a 401K or even an IRA. Exchange traded gold funds will typically qualify similar to other stocks traded out there. Gold coins might be a different tale. A pension could only accept .999 pure gold for investing.
Gold Versus Stocks Trends
The gold vs. stocks trends over the last 106 years have ranged in length from 3 years to 29 years. Nevertheless, judging from the Fed’s money printing and the current action in gold, it’s quite possible we’ll see a mammoth run in the precious metal at some time in the next 18 months.
A lot of commentators talk about how gold is near an all-time high while stocks have actually fallen 50 %, making them cheap once again. Nevertheless from a long-term viewpoint, gold and stocks are nowhere near their typical relationship.
Popular Gold Trades
The funds popularly traded are GLD (gold bullion), GDX (gold miner stocks), SLV (Silver Bullion), XGD. TO (Canadian Gold Stocks), CEF/A. TO (Canadian Gold & Silver Bullion). If you look at a comparison chart you will see some funds provide much larger moves than others. In general it is good to possess a bullion fund and a rare-earth element stock fund so that you get the best of both worlds.
The Bottom Line
Do not let the talking heads deceive you. The best gold stocks are not cheap, especially compared with gold. And the bull market in gold is nowhere near over. Over the last 35 years, more Americans started investing than at any OTHER period in history. As stocks collapse later on this year, they’ll either take out their cash pushing the DJIA lower OR they’ll shift their cash into alternate investment trainings like gold. When they do, the DJIA will fall further and gold will emerge greater.
Gold Stocks Are A Wise Investment
Lots of individuals discover acquiring gold stocks is really a wise investment for their profile. When stock of companies decline, the gold stock price increases meaning this provides some defense for long lasting financial investments. Numerous investment counselors are recommending inclusion of rare-earth element stocks in long-term pension. Gold mining stocks are very popular and it is a good idea to monitor the gold stock market for opportunities.