Monday, December 20, 2004
Not even my folks are buying my recommendations yet...
[In the January 2005 Investor's Forecast issue of The Oxford Club Communiqué, I tell members where I think they should put their money in 2005. Part of the answer lies in gold investing. In today's letter, I'll reveal why that is, and how you can add gold investing to your portfolio to maximize your returns this year - and for the next five. ~ Steve]
Last month I spoke at the New Orleans Investment Conference... formerly "THE" gold investing conference to be at in the 1980s...
Somewhere along the way, conference organizers changed its name when they figured that nobody really wanted a "gold" conference anymore.
But it appears that gold is making a comeback. I'm not just talking about the price of gold, which is up from $250 in early 2001 to $440 today. I'm talking about the number of people interested in gold investing today as compared to recent years...
Before my speech I spoke with conference organizer Brien Lundin backstage. Trying to gauge the current bull market in gold with the last one, 25 years ago, I asked: "Brien, what was the peak attendance of this conference?"
"We had roughly 4,000-plus attendees in 1980 - which was when gold peaked at over $800 an ounce."
"And how many are here now?" I asked.
"1,200, which is up a lot in the last few years. I remember in 2000, legendary gold stock analyst Bob Bishop had just one attendee show up at his workshop. If that wasn't a signal of the bottom in gold, I don't know what was."
I wished Brien the best. But I told him when he gets more than 4,000 attendees again, I'll probably start selling some of my gold.
Two New Reasons We're Still In the Early Stages of a New Gold Investing Bull Market
I still think the bull market in gold investing is only in its early stages. I'll give two reasons you probably haven't seen before...
The first reason is, for it to truly be a bull market in gold, gold needs to be rising across the board - against the U.S. dollar, the euro, the Australian dollar, the South African rand, you name it. The current reality is that gold has only soared against the dollar. Against all those other currencies I mentioned, gold is either flat or down.
That leads me to believe that what we've seen so far is not a rip-roaring bull market in gold... but an exceptional fall in the dollar. Consider this chart - you can see that gold has done nothing in terms of euros in the last few years (the blue line), while it's taken a lot more U.S. dollars (the red line) to buy an ounce of gold. It's a dollar bear market, not a full-blown gold bull market yet, if you get my meaning.
The second reason I believe we're not in a rip-roaring gold bull market yet is anecdotal... but I think the message is important.
Consider this... My parents and my parents-in-law love my newsletter. They buy every recommendation of mine that makes sense for them. I know they trust my homework, and they love me. But you know what? As far as I know, neither set of parents has bought gold yet...
"My Mom and Dad Haven't Even Taken My Advice... Yet"
Heck, if the folks who love me haven't even taken my advice here, and they buy everything, I wonder how many of my other readers have actually taken my advice and bought my recommended gold coins, as an example.
The last three bull markets in rare coins saw coin prices rise by 348%, 1,195% and 665%. Your downside risk is limited, as the coins I've recommended are near their lowest premiums over their meltdown value in recorded history. And yet the upside is still triple-digit returns. What's not to like?
I still own more gold than I probably should, with no intentions of selling now. You might want to consider gold investing, too, as there's likely plenty more room to run.
Good investing,
Steve
