We are in the beginning stages of a new bull market in gold and silver. It began for real - confirmed by the decisive breakout for gold in May 2019 - a full seven months before COVID-19 burst onto the world stage. Fueled by pandemic fears (and the economically crippling government response), gold achieved a new all-time high of $2,075 per ounce in roughly one year. Since then, we have seen some profit taking - which we love to see in healthy bull markets. But it got investors thinking about two things... Is it too late to buy into this bull market? And how can I tell when it is time to get out? Market UpdateGold is up roughly 25% this year. Silver is up roughly 36% on the year. Much of both of those moves were completed a month or so ago. It was too much, too fast. As with any market, when the precious metals market got overheated, profit taking brought the euphoria down a notch or two. Remember, precious metals bull markets tend to last about a decade. We are either one year in or four years in, depending upon whom you ask. And given what gold and silver did in the previous two bull markets (1971 to 1980 and 2001 to 2011), we are roughly one-sixth of the way to gold's potential peak and one-tenth of the way to silver's potential peak. We still have a long way to go. The pullback needed to happen for the market to be healthy. Dips should be embraced, not feared. They are opportunities to buy well in this rising bull market. This year's gains are mere fractions of what both gold and silver are expected to achieve by the end of this bull market. So, to answer the first question above, it is absolutely not too late to get in. Stay the course. A Strategy Born of a Baruch TenetBut how will you know when it is the end? How will you know it's not just a bull market dip? Truth be told, you probably can't know for sure. But you don't need to know… if you heed the advice of sage investor Bernard Baruch. One of Baruch's most inspirational quotes led me to my technique for not missing the top. To paraphrase him... I don't want the first 20% or last 20% of profits from any investment. All I want is my 60% in the middle. In other words, he did not invest until a trend was established, and he didn't wait until the bitter end to sell, hoping to catch a top. Here's how I put that proven wisdom into action for myself... |
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