Tom Szabo

Smart Money Continues to Accumulate Gold

I wish more Seeking Alpha contributions would live up to the namesake and actually provide some insight instead of constant rehash.

The real smart money accumulated a while ago, any buying now is strictly for trading purposes. The $2,400 inflation adjusted high would be a spike based on the 1980 spike and not many people would or could realistically get out at such levels. A more reasonable 1980 reference price would be $600 (gold spent at least a few weeks above that level) and that translates to around a $1650 gold price when adjusted for inflation. Of course, we are talking only inflation between 1980 and today, not the future inflation that is currently being baked in by desperate fiscal and monetary policies.

Time to Sell Gold?

The bull market in gold started in 2001 or 2002 with gold crossing $300 or so. A tripling (2x return) from current levels is certainly possible but that would be an 8x return for those who have held since the start. In other words, the easy money has already been made. It is acceptable to accumulate a core holding (and that means physical metal in your own possession) of 10% gold and silver in your asset allocation without regard to price but beyond that you are speculating. Even if higher gold prices seem like a slam dunk given the "vulnerable fiat currencies and controversial fiscal policies". Don't get me wrong, there is absolutely nothing wrong with gold speculation other than calling it "saving and investing". For the record, I do believe gold will go much higher at some point sooner or later but if your "savings" will be going to pay living expenses in the next couple of years then buying gold at $900 could hurt you.