Gold – Buy Now

September 15, 2011 | By | Reply More

We wrote last week that if spot gold fell below $1800 an oz. it would be a good time to buy.

The yellow metal is in a long term up trend, an opinion that few can argue convincingly against. This present situation brings into play two of those wise old stock market traders mantras, “follow the trend” and “buy the dips”. Of course we can look at the plethora of technical indicators in the hope, or even optimistic expectation, that we can time our entry with accuracy.

In other words before the market in gold resumes its climb but we would not bank on it in the see-saw precious metal market we are experiencing now.

Rather than miss an opportunity to add to our gold stash at under our floor of $1800 we are prepared to accept the chance of a further fall, even to as low as $1700, confident that even in such a scenario gold will resume its destiny, which we reckon will be $2000 an oz by the end of the year.

Commodities the Best Bet

We know the market will have the last word so we may be very wrong but that is the nature of the investment game and we must accept it although our logic tells us that the financial world as we have known it is going to “hell in a handcart” leaving precious metals and basic essential commodities the best bets to increase or at least to preserve our capital.

Miners Look a Bargain

Whatever happens in the immediate future to the price of gold and silver, their producers have enjoyed several years of increasing prosperity as the market has developed. Right now the miners are sitting up begging for investors to take advantage of the many bargains that abound in their sector.

We also remind you that gold, silver and platinum production continue to fall and that historically, well chosen miners have rewarded their investors with a significantly higher reward to cost ratio over buying the physical metal. In other words, leverage.

At this time our tendency is to stick with the senior miners, those whose costs for extraction are amongst the lowest and who are not exposed to any great extent in countries of political uncertainty. Easy homework!

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