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Editor's Note: Less than a year before the COVID-19 pandemic swept the world, a new gold bull market began. So today, Rich Checkan of Asset Strategies International is back to talk about this thriving metals market.

He's here to tell investors whether it's too late to enter the gold market... and when they should get out.

- Kaitlyn Hopkins, Assistant Managing Editor

A New Bull Market Is Underway in Metals: Is It Too Late to Get In?

Rich Checkan | President and COO | Asset Strategies International

Rich Checkan

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 Update

Gold 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 Tenet

But 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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Time for Action

I buy gold and silver for two reasons: wealth insurance and profit.

After 25 years of working with investors, I believe most investments fall into these two categories.

Wealth insurance is the store of purchasing power, with high liquidity, for a potential financial crisis you hope to never have.

I treat my gold for wealth insurance a certain way. I keep my 10% allocation at that level at all times. I never sell it, regardless of the price hitting new all-time highs or short-term lows.

If I have a financial emergency, I sell immediately to meet the need. Then, as soon as possible, I replenish my 10% for the next potential crisis I hope I never have... at any price.

As you can see, my gold purchased for wealth insurance has no care at all about tops or bottoms. I need it always. I have it always. Period.

But gold and silver for profit are a different story. For me, they're another 10% to 15% of investable assets - but only in gold and silver bull markets.

Here is where I follow the wisdom of the legendary Baruch.

I wait for the trend to establish itself. Then I buy.

As gold and silver climb in price, I continually rebalance my position, along with all my other for-profit investments.

If gold or silver doubles, I sell half. No emotion. I just do it.

If I see dips, I add. Again, no emotion - just doing.

If I do this all along the way, I am taking profits while I continue to participate in the bull market. As one of my mentors, Glen O. Kirsch, used to say, "Nobody ever went broke by taking a profit."

How to Tell a Bear From a Dip

The only tricky part of this strategy is recognizing the beginning of the bear market as opposed to another bull market dip.

I do this by looking for a few key signals...

  • A bull market nearing the 10-year mark
  • Gold appreciating to two to three times its previous bull market high
  • A gold-silver ratio of 35 to 50
  • Market sentiment
  • Interest rates and real returns
  • A decrease in uncertainty and, as a result, stock market volatility
  • A decrease in geopolitical crises and social unrest.

One or two of these triggers do not signal the end of the bull market. Three to four triggers make me pay closer attention... ready to exit my position.

If we catch the top exactly, great. If we sell a little early, great. If we sell a little late, great.

In any of those cases, I am pretty certain we would have already taken our 60% profits out of the middle.

This is how you can keep what's yours in a gold and silver bull market, and never miss the top... or at least, not by enough to matter!

Good investing,

Rich

P.S. If you want to learn more about gold or have any questions about the information I've shared today, please feel free to contact me at 800.831.0007.

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