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Profit Confidential provides expert advice about how to invest in gold. With profit confidential you are receiving the news with the opinions, commentaries about investment in gold.
How easily we forget—gold bullion started 2010 at a price of $1,092 per ounce. It ended 2010 at $1,422 an ounce for a one-year gain of 30%. What other investment returned 30% last year? Gold stocks, of course, did even better, with the Dow Jones Gold Mining Index up 34% in 2010.
Sure, there are two camps on the gold debate: Those who say that gold bullion is in a bubble that is deflating and those who think that the debasing of the U.S. dollar will push gold much higher over the next two to five years. I’m obviously in the second camp.
This morning, gold is at a new two-month low and I’m already hearing the cries that the bull market in gold is over. I heard the same rhetoric when gold bullion fell from $725.00 to $575.00 an ounce in mid-2006 (a 20% correction) and again in 2008, when gold bullion fell in price from $1,000 an ounce in March 2008 to $750.00 an ounce in October of that year (a 25% correction).
My view on gold bullion is simple:
The metal has been rising in price for almost a decade. The year 2010 was a year many novice investors got into gold stocks. They are getting their “Christening”
From its peak of about $1,422 U.S. an ounce, gold is only off about six percent, not much to panic about considering the 2006 correction was 20% and the 2008 correction was 25%.
Seasonally, the worst months for gold bullion prices are the period from January to March.
It is impossible for any forecaster to pinpoint the exact bottom of the current correction in the gold bullion bull market. Those who have faith in the metal, those who believe that foreigners will have trouble continuing to buy U.S. Treasuries as America continues it path to debt of $20.0 trillion by the end of this decade, and the true gold bugs who believe the status of the U.S. dollar as a world reserve currency will be jeopardy should see corrections in the gold bull market as opportunities.
I bought more gold-related investments on Monday and will buy more today, making it twice this week I believe I took advantage of the softness in the gold market. Could I be wrong? Sure, we could all be wrong. But I’ll likely be a buyer of more gold-related investments all the way down to a 20% correction. And, if that big of a correction doesn’t happen, I believe I’ll be happy with the additional investments in the metal I made on its price weakness.
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