Quote:
Originally Posted by 1973
The price of gold has risen more than gold stocks in the past 1 year. It is still true tracing 5 years back. At this high gold price, the profit growth potential is not reflected at all in many of these gold stocks which I see in near future a huge revaluation in gold miners to reflect this reality. From now onward, the risk is more at the side of gold than gold miners stocks. If gold price drops, the miners may at most drop the same percentage or even less, but when gold price stabilises or starts its new upleg, there is a good chance that these miners may finally play catch up (that means a huge upward price valuation).
Alot of stupid money, deleverage and buy US$ and bond but they are also very dangerous place to be. Safest is gold though the price may be volatile too. I don't think a credit crisis like 2008 will hit again. The current mini crash is probably a flash recession panic and general stock price may as well move up from here to new high. Even if there is deveraging, I think gold may be less affected this time than in 2008 simply because more people have come to the realisation of the nature of the crisis. If gold price can relain high or even go higher, GDX price will be resilient in the face of deleveraging even if there is one soon.
Volatility in gold is common, the last week drop is nothing if one knows that. It has a good run from 1500 to 1900 in a few months and it is a good time to take a rest before the next leg up soon.
|
Just want to add my point on the part about speculative money. Speculative money is what that are and will be causing all the volatility. Part of the reason for the last week huge correction in gold and silver was because many people made huge bet with margin. That is vulnerable. What happened was that both COMEX and exchange at Shanghai hike the margin for gold, silver and copper and these speculative margin bets have to liquidate.