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Gold Hits Stride as Silver Awakens
A Note from Associate Franchise Publisher Rachel Gearhart – Many investors are still reeling from the March sell-off and are asking the same question…
Is now the time to buy precious metals?
To answer that question, we turn to gold bug and close friend of The Oxford Club Rich Checkan.
You see, the Club works with a select group of niche investment experts to get you hands-on support beyond what the Club can legally provide.
We call them our Pillar One Advisors.
Among them is Asset Strategies International Inc. (ASI) – a leader in precious metals, foreign currencies and rare tangible assets since 1982.
Today, Rich, ASI president and COO, shares his outlook for gold and silver in the market.
To learn more about ASI and the services it provides, please call 800.831.0007 or email Rich at rcheckan@assetstrategies.com. Be sure to mention that you’re an Oxford Club Member to receive additional benefits.
Gold has been white-hot!
In March, April and May, an incredible surge in the demand for gold bars and coins caught mints and refiners off guard. The result was skyrocketing premiums and long delivery delays for physical gold.
According to the World Gold Council, more gold was purchased by gold exchange-traded funds (ETFs) this year (through May 31) than in any full year since gold ETFs were created. Gold ETFs are often referred to as “paper gold.”
Paper gold is traded. Physical gold is held in strong hands. Both are incredibly liquid. Both are hot commodities right now.
And, with silver’s recent surge higher, we thought it would be good timing for a gold and silver update.
First, let’s take a look at gold… Why do investors buy it, and why is it moving higher right now?
Why Do Investors Buy Gold?
In my experience, people buy gold and other precious metals for two reasons…
- Wealth insurance
- Profit.
At least, those are the two most consistent reasons we hear. However, I suspect that most gold buyers want both.
The good news is both are possible… just not all the time.
Gold as wealth insurance is an insurance policy that should be carried at all times. By definition, gold is…
A store of purchasing power, in a form with high liquidity, for a potential financial crisis you hope to never have.
Wealth insurance gold should make up 5% to 10% of your investable assets.
You buy it. You hold it. You sell it only if you have a financial crisis. If you do have a crisis, you sell immediately, meet the financial need and replenish your wealth insurance as soon as possible, after the emergency passes.
[The Oxford Club advocates that 5% of your portfolio be held in gold for this very reason.]
For-profit gold is different.
You buy it when gold is at its cyclical low point, and you sell periodically to maintain your allocation. For many investors, when the time is right, this could be an additional 5% to 15% of investable assets.
So, if the value of the gold doubles, you should sell half and take a profit whenever you rebalance your portfolio. When the precious metals bull market turns bear, you begin to gradually sell out of your position over time.
Why Is Gold Moving Higher Right Now?
There are two major reasons for the gold price rising right now: the emergence of a bull market… and fear.
Gold’s bear market began the moment gold hit its bull market peak of more than $1,900 per ounce in September 2011. That peak capped a 10-year rise from $253 per ounce – a 650% appreciation.
As a seasoned stock investor, you know bulls turn to bears and bears turn to bulls.
Well, gold broke out into a new bull market in May 2019 as its price moved up through significant resistance at $1,350 per ounce and quickly moved above $1,400 per ounce.
There is no certainty as to when this bull market ends, but, historically, precious metals bull markets tend to last five to 10 years.
Now, many people incorrectly attribute the recent move in gold to the reaction to COVID-19. But, as mentioned above, the breakout occurred seven months prior to the worldwide spread of the virus.
Gold’s reaction to coronavirus this spring was driven by fear and need. Wealth insurance policies in gold were being cashed in to deal with financial emergencies caused by the pandemic.
Make no mistake. The bull market in gold was underway long before COVID-19 appeared on the scene.
Silver Awakens
Those of you who have heard me speak at Oxford Club events over the years know gold is your precious metals leader. It turns higher first after a bear market. It turns lower first after a bull market. Silver, platinum and palladium follow gold’s lead.
But silver tends to outperform gold. In the 10-year period leading up to April 2011 – roughly the same period where gold appreciated 650% – silver appreciated from $4.53 per ounce to nearly $50 per ounce, a 1,000% appreciation.
In May, this historical phenomenon began to repeat itself.
Take a look at silver’s chart…
At the beginning of May, it took 127 ounces of silver to buy 1 ounce of gold. Within a couple of weeks, it took less than 95 ounces of silver to buy that same ounce of gold.
Silver is finally on the move.
Buy the Dips
I believe acquiring gold and silver in 2020 is the best way for you to Keep What’s Yours!
Knowing there are short-term moves up and down in longer-term bull and bear markets, you don’t need to…
- Worry about missing the boat
- Panic
- Jump in all at once.
In this rising bull market, whether you are buying gold or silver, average into your allocations by buying the dips.
And since the moves higher by gold and silver in May, we are in the middle of one of those buying opportunities right now.
This is a perfect occasion for prudent Oxfordians to pick up some gold and silver cheaper than they should be again for some time.
Good investing, and stay safe…
Rich Checkan
President, Asset Strategies International
www.assetstrategies.com
rcheckan@assetstrategies.com
800.831.0007
P.S. Does the coronavirus have you concerned for your health? Chief Growth Officer Nathan Hurd details how you can keep your body in tip-top shape in his latest episode of Survive and Thrive. Click here to watch it.