Buy Gold? Not Yet!
A full-page ad for gold coins is often featured in The National Post these days with the headline “GOLD BLASTS PAST $644/oz! BUY NOW - EXPERTS NOW PREDICT $2,000 - $3,000 per oz”.
That is one of the factors I used to make my prediction of a short term correction.
When everybody thinks they know everything that's when the market does the complete opposite of what they expected it to do.
If people are expecting gold to go straight up to $2,000 or more, then it will through them a curve ball and drop faster than they thought possible. All things have a tendency to drop faster than they rose so we keep an eye out for that.
I bet there are tons of people buying gold right now around the $700's (possibly because of this ad). And I might not be surprised to see them selling at $600 at the bottom of our short term correction.
I don't know what kind of budget these people have but as soon as they stop running this ad because gold has dropped to around $600, then that will be the sign that the market is going to turn around soon.
Plus with seeing the Venture down 5% overall, that must make everybody really uneasy and maybe even scared. Is this commodity boom over? Will I lose all my gains?
I have some little feelings to doubt every now and then but I always go back to the two sayings of the most succesful stock pickers:
1. Sell into Strength, Buy into Weakness
2. Buy on the dips
So you can be sure that the smart people will be buying every single day we have huge dips like this. Then they will be selling their shares back to the people who sold them on the down day.
The question then is, do you want to be one of the smart people or part of the crowd? The crowd sells on days like today and buys when they see the market up 100 points plus.
Of course it's your choice. I will do my best in my own investments to act like the smart money but of course it's not always easy.
In my opinion, I think we are still quite early in the huge commodity boom we are having.
Maybe if you sold today, you will look smart because it may happen that shares will be down another 10% by the end of the week.
But we talk 6 months from now, you may be regretting selling your shares so cheaply.
My opinion of course, but something to think about...