On the front page of The New Zealand Herald’s Business section today, 30th January 2008 is a wonderful picture of some gold bars above an article entitled ‘Precious Metals Hit Record Highs‘.
The article goes on to say “Fears of Recession See Investors Opting for the Safety of Gold, Platinum” with the primary causes being named as the dollar weakness and the power crises in major producer South Africa, credit for the article is given to Reuters. What pleased us is that the article was not buried at the foot of page 64 but featured on the front page. In our humble opinion the investing fraternity has yet to recognise the Precious Metals despite the outstanding performance of both gold and silver and their associated mining stocks. Even the efforts of our peers in the bull camp, many highly regarded financial newsletter writers have their words ignored. Not to worry, the momentum is building and when it finally arrives it will be an extraordinary event. The flight to safety coupled with the speed of today’s communications will combine to make the ‘herd’ turbo driven into panic buying, the like of which will be recorded by the historians as the opportunity of a lifetime.
There is a school of thought that looks at previous precious metals bull markets and suggests that this one will be the same. But we beg to differ. Why? One word: INTERNET
The world wide web delivers news of events, rate cuts, rogue traders, et al, in a split second and traders execute trades at the click of a button, instantly. The gyrations are thus exaggerated adding fuel to both peaks and troughs – the final spike could well be to a number that none of us bulls could have ever imagined. Short term vicious corrections will be volatile and push us from pillar to post so our core position will remain intact being presently 90% invested in precious metals stocks at any one time.
Tomorrow could see an adverse reaction to the Federal Reserve Boards deliberations as expectations run high. Don’t worry about it, these shake outs are necessary and ultimately build a stronger bull market.
Hold on tight.
