The weather has taken a turn for the worse here on the eastern shore, but I’m still trying to make the most of my vacation.
So, for the rest of the week, I’ve asked some of my colleagues — as well as some industry experts on crisis, money and personal liberty — to fill in for me.
Today’s issue comes to you courtesy of Olivier Garret, expert gold investor and the CEO of the Hard Assets Alliance.
All the best,
Editor, Money & Crisis
Never Mind the Pundits
By Olivier Garret
If you’ve been paying attention to the financial “experts” lately, you’ve probably heard the prediction that gold is about to plunge to $700.
These kind of predictions make for great television but they are wrong more often than not. If it was that easy to predict the next market move, we’d all be rich.
Three to four years ago, financial guru Harry Dent predicted that gold would go down below $700 and could end up as low as $300 within a year.
It’s never broken below $1,100.
In late 2010, many well-respected financial experts predicted that gold was to break $2,000 and might hit $10,000.
They may be right someday, but it hasn’t happened yet.
The problem is very few people are willing to be contrarians when an asset class is out of favor. So everyone is just building their predictions on the underlying consensus trend.
But trends have a tendency to reverse.
So, instead of timing short-term market moves, here’s what I do.
Seek Out the Value
To make my investment decisions, I employ a value investing strategy.
This means I look at the real and relative values of an asset class before deciding whether to invest or not.
I always sell some of the assets that have performed well and rebalance my portfolio by buying those that have underperformed.
Of course, I don’t invest in assets when they are in free fall; I wait until they stabilize.
Supply and Demand
Another thing you should look at when evaluating investments is the supply and demand dynamics. At times, there is a definite oversupply of an asset and it’s wise to wait until supply is cut down before buying it.
Uranium is a perfect example here. It took six years for its supply to get back to normal. Now it’s quite attractive again.
In fact, supply and demand is exactly why I believe gold and silver are good investments now.
Demand for physical bullion is solid — all it would take is a little turmoil in the markets to send the demand skyrocketing.
Meanwhile, bullion supply has been in decline because many mines are shutting down.
The miners have stopped exploring due to low bullion prices and are now running low on reserves.
In this case, we see an apparent undersupply of bullion, which is not likely to change anytime soon.
$700 Gold Is… a Bargain!
I don’t pretend to know if gold will be cheaper in six months.
But what I do know is that gold and silver are good values at current prices — both historically and relative to other asset classes.
Even now, I’m still adding more precious metals to my portfolio. And if they get cheaper, I will be happy to buy more.
I would jump at the chance to snap up gold at $700… but I don’t think I’ll get the opportunity any time soon.
If you’d like to know more about investing in precious metals, grab a free copy of my e-book: Investing in Precious Metals 101: How to Buy and Store Physical Gold and Silver.
Learn how to make asset correlation work for you, how to buy metal (plus how much you need), and which type of gold makes for the safest investment.
It’s the definitive guide for investors new to the precious metals market.
To golden opportunities,
Founder and CEO
Hard Assets Alliance