Why is it that stories are told and become easier to believe when investments rise or fall a lot. The recent one is gold and look at all the believable bearish news and stories out there today. For me personally it all sounds true and that the only path for gold is down along with the Euro and the US dollar is going up because it is the reserve currency and will be for a very long time. I know we call it noise but it still is very easy to believe because the news presented sure sounds true and I am sure many here on the forum think it to be true and will not touch gold.
Back in early 2008 oil was rising to $150 and inflation was the scare and the US dollar was going to zero. Again the cases made and the stories sounded very true and it sure sounded to me like this will for sure be the case so whatever you do don't buy longer term bonds.
In the late 90's as oil approached $10 a barrel I thought wow what a buy because I am still pretty sure that we still need oil. But listening to others and the news out there I thought it best to stay away.
Look at oil right now and SU as many here like to talk about and it is dying like gold as deflation sets in Europe collapses and the US economy looks good along with the US dollar. Again the only trade to look at is cash and keep your money safe as the news looks very bad indeed. In the case of oil it may have a way to run yet into the summer.
How are all of you thinking and feeling at this time? For me it seems like it is impossible to make any money in gold and gold miners and the news is very easy to follow as it all makes sense and it all points to the downside. My past experience however is telling me that now may be the time for me to buy. After a good bounce gold should go down again to reach a final low but then again I think everyone is thinking this way. Back in the summer of 2009 everyone thought that the rally was over in the stock market and we would resume our walk down the depression trail but it never happened. So much can happen so fast in this market that what comes easy to believe one day becomes silly the next.
The best solution is perhaps to purchase only dividend paying stocks which, as Kevin O'leary is fond of saying, are something which, over time, at least "pay daddy".
At some periods of time, commodity stocks can be very volatile and can plunge suddenly without even touching the sides on the way down.
That is one reason why investing in the TSX index does not, in and of itself, provide you with proper diversification.
It seems to me that investing in commodities is more suited to traders and market timers than to buy-and-holders.
That said, 5 per cent of my portfolio is invested in the RBC Global Precious Metals Fund which I rebalance periodically to retain that allocation and so it does involve some buying and selling in that regard.
Very true on those fronts Belguy but it is still interesting to hear how people are thinking and feeling as we reach extremes or conclusions about stuff only to find out later the opposite occurs. I am sure everyone was of the opinion in the summer of 2008 that interest rates will rise and lock in your mortgage because the US dollar is done going to zero and the long bonds with it.
What do we know today? We think we know the US dollar is the only safe haven Europe and gold is finished and possibly oil will go to hell with it at least through the summer in oils case.
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