Stewart Thomson is back with a heaping dose of reality for those who tried to sell their gold and gold stocks in anticipation of the "summer doldrums" that never materialized.
Those who sold their gold and gold stocks because of coming “seasonal doldrums” now look totally ridiculous. Can you imagine somebody telling you how they tried to trade the long side of the Dow through the crisis of 1929? In this even larger dollar crisis, if you buy the dollar against gold in size repeatedly, you stand to be financially exterminated. It’s only a matter of time before it really happens. What does it take for the amateur investor to really learn? Obviously, the answer is… more pain.
Remember that 93% of gold analysts were bearish at the recent lows for gold and GDX. They were all wrong. Investors who sold gold stocks into the lows and bought the dollar are now in some serious trouble. The temptation is to try to buy back in, right now, but after this two week surge in price, what could happen is that price then promptly falls, and they (you?) sell at more losses.
Over time, you learn that the most wealth is built by buying into price areas that you never believed could or would happen. If you focus on trading smaller than you “know” is rational most of the time, the rare occasions when price does decline massively will see you allocating your largest amounts of capital, while most investors are liquidating and booking huge losses. You can’t predict when those times occur with any consistency, but you can respond to them as a professional investor, on the buy.
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