What are your thoughts as you watch the spot price of gold and other precious metals? Do you check them every day? Every hour?
We’ve sometimes discussed whether or not I should include the current spot price in these posts. Perhaps I could include yesterday’s closing prices. But the fact is that it’s just not something that I dwell on.
Sometimes when I’m focused on studying certain aspects of the market I lose track of the spot price of gold for days. And, frankly, that’s fine with me. You see, as we’ve studied, the fundamentals don’t change.
For instance, if I found out tomorrow that the price had fallen to $1400 an ounce yesterday, I would be a little surprised, but would still go on with my studies and pursuits as usual. I would likely bring up the fact that this offers a greater opportunity than last week, but it wouldn’t change my confidence in the fundamentals.
Suppose that two days from now I found out that gold had spiked to $2200 today. Then what? Well, the same as if it dipped to $1400, or even $1200. I would comment on it and caution people to keep their heads about them. But the fundamentals wouldn’t change.
We’re not day traders. There are those who focus on current fluctuations in their decision making. My hat’s off to them. That’s hard work and a very difficult environment to work in. But, while we are confident that gold will increase, giving investors an excellent return, our focus is on the long haul.
You see, gold is strong. It’s in a bull market. It still has a lot of run left in it. There will be pullbacks and spikes. Current economic turmoil demands volatility. And precious metals markets tend toward volatility in the midst of turmoil anyway. So, as we noted before, gold will go up, it’ll go down, it’ll set records, it’ll drop hard, etc. But, through it all, the fundamentals will remain the same and we are thoroughly convinced that the overall trajectory of gold will continue to climb.
Where will it end? That’s impossible to tell. How far the dollar drops, in the end, will play a part in that. Or, perhaps, how fast it drops would be more accurate. Though central bankers may be able to prop it up for many years to come, eventually the dollar will lose its ability to stand against the fundamental pressures against it. When that day comes, whether it’s 5 years, or 50, the last thing anyone wants to be caught holding in their hands is US currency.
These are the kinds of fundamentals that help the wise investor rest easy and watch for opportunity. For gold, buy the pullbacks. Then take a break, watch and wait, as the price moves up. Then be prepared on the next pullback, if you’re able. Once you can rest in the foundational characteristics inherent in gold ownership, the movements in the price of gold will constantly encourage what you know to be true.
For your prosperity,
The Gold Informant