I think we are within 12-18 months of the point where there will be a real fundamental change in the gold market that will make investing as opposed to trading a much more viable option.
I prefer investing in individual stocks, although a well diversified mutual fund with no sales charges and low fees would work. Bullion does not give enough leverage, and it can be a difficult to deal with. It might also be worthwhile to look at long term gold options on future contracts. If the premiums are not unreasonable, one could risk the entire amount versus the possibility of a 5-10X return.
As for indicators, I'm looking at the continuing topping action in the US dollar and paying close attention to interest rates. Charting resource currencies ($Australian, $Canada, and RSA rand) should be required for gold investors. I'm particularly interested in the recent drop in the rand, and would like to see how/when it bottoms. Lots of things, other than looking at the gold price itself, can be VERY useful in determining future gold prices.
Don't want to promote specific shares, but RSA stocks should continue strong due to weak rand, and some of the best opportunities continue to be in mid-tier producers. Nibbling at exploration/development shares might be OK, but I still think it may be too soon. Then again if you are counting on a 10-fold increases in the next cycle, it probably wouldn't kill you if you paid 75 cents for something that dipped to 50 cents and eventually got up to $5. |
