Gold investments

Gold and gold mining shares have taken a shellacking during the last three days of trading. Talk is of a “rout” and the bursting of a bubble.

I will premise that the nominal value of gold and silver can indeed go lower from here. When investing in the markets, volatility is to be expected. Investments in gold and silver necessarily provide much greater volatility still. In a DBFM context, investing in gold is the equivalent of betting against sovereigns. Volatility should be the order of the day especially when you consider that most Western sovereigns and their monetary authorities are currently fighting for survival. Convulsions will become increasingly frequent.

Let me premise too that there are necessarily differences in when someone might have entered the bullion market. For people that bought in last week, this correction is indeed disheartening. For those that got into the bullion market one, three or ten years ago, this recent loss is all in a day’s work. Particularly when compared to the losses of the general market as represented by the S&P over the same period of time

Till the charts below tell me otherwise, gold bullion and the shares of gold miners are still a better investment than the general market. In particular, some miners are now beginning to pay dividends so that as this practice becomes more generalized, there will no longer be any excuse to prefer shares of “industrials” over those of miners.



Not to mention the way gold has safeguarded purchasing power in all major global currencies over the past ten years:

Page 4 – charts 430 to 450 –

Naturally, none of this constitutes investment advise.


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