Gold Sellers RemorseJeff Clark He recognizes now that he reacted emotionally to the crash, panicking at the plummet and dumping everything regardless of quality. Hes kicking himself for doing so, because he succumbed to an impulsive move, locked in a loss, and realizes that the core reasons for owning gold havent really changed. Obviously some investors believe they made the correct move by exiting the sector; theyre convinced gold is a dead trade and will be a losing investment going forward. My investor friend thought so too for a time, but now thinks he may have acted too hastily. I think sellers abandoned gold equities prematurely on weak grounds, and will be back when that becomes obvious, joined by even bigger numbers of new investors. The ultimate issue with gold stocks is whether gold itself will rise or fall. If it rises, gold stocks will get pulled up by the metal and then deliver the leverage they have so many times in the past. If it falls, even todays profitable producers will suffer. There are key reasons why I think golds trend will resume its upward course, and why sellers shouldve paid a little more attention to the advertising before dumping their shares On the debt side, Brent Johnson, founder of the Santiago Gold Fund, shows just how unsustainable this path has become. Subliminal Advertising. Unbeknown to many investors, central bank buying represents roughly 12% of all gold demand. How they reacted to the April selloff would provide insight into whether this important trend is slowing or growing Despite the drop in price, demand from the central banks of emerging countries isnt slowing. You dont have to be Nostradamus to see the writing on the wall with debt and currency dilution. As Grant Williams points out in this video (gold comments begin at the 33:30 mark), if emerging-market countries raised their gold Reserves from the current average of 2.6% to 15%, it would require 17,359 tonnes of gold (558.1 million ounces). This is roughly seven years of global production which is almost certainly a low estimate given the fact that China and Russia dont export metal. Guerrilla Advertising. Theres been a lot of data about how the crash in gold was met with a rush by physical buyers. This data point may top them all. Data-Driven Advertising. Naturally, if the gold price is down, the assets of producers are worth less than they are at higher prices. But as with all crashes, stock prices overshoot, and gold equities have been no exception. In fact, we demonstrated in the May BIG GOLD that gold stocks are cheaper than dirt. We compared the price of a tonne of gold and silver ore from each of our companies to the price of Professional Blend Topsoil, EverBlack Premium Mulch, and ComTil Compost. After totaling each companys tonnage of proven and probable gold and silver ore Reserves and dividing it by their respective market cap, we got a price per tonne. To compare apples to apples, we converted dirt, compost, and mulch from yards (how its usually sold) to tonnes, also getting a price per tonne. As Rick Rule told us three weeks ago, sometimes things get cheap enough, even if you worry there might be another sale two weeks from now: When goods that you want to own are attractively priced, you buy them. I think its safe to say gold stocks are attractively priced. And in todaysBIG GOLD, well tell you exactly what were buying, and if we think the low is in for gold. The bottom line for us is that while the Feds efforts may seem to have some positive effects on certain aspects of the economy, there is no free lunch. Concluding that there will be no negative fallout from decades of government profligacy around the world is short-sighted. The market is trying to flush out weak and hasty investors. Dont fall for it. Someday, perhaps not too long from now, I think well have reason to celebrate that buyers glee beats sellers remorse. linkwithin_text=Related Articles: 