Paul Mladjenovic - Investing in Gold & Silver For Dummies

The 2008 financial crisis could, of course, be a whole book all by itself. The stock market and other paper assets (such as mortgages) had a historic crisis and crash. Virtually every major asset was down for the year except the U.S. dollar and gold:

The U.S. dollar was the world’s reserve currency, and it became a safe haven of sorts. Because paper assets and the world’s other currencies declined sharply, investors across the globe fled to financial safety.

Gold started the year at $857 (January 2, 2008) and ended the year at $883.60 for a modest percentage gain of about 3 percent.

Maybe 3 percent doesn’t sound great, but it’s spectacular when you compare it to the broad wreckage of most major investment assets that year. A good example is the hammering of major stocks in the Dow Jones (DJIA) that year. The DJIA started the year at 13,043 and ended 2008 at 8,776 — a brutal decline of 33 percent. Also, gold’s kid brother — I’m talking about silver — had a rough 2008. It was in the far corner sobbing quietly with a loss for the year at 25.6 percent. However, silver’s story gets better, and that narrative is in Chapter 6.

Fortunately, the shiny seeds of a bull market are usually planted in the muddy dirt of a grim bear market (poetic — you can quote me). Stocks got on the comeback trail in 2009, but gold was ready to roar again, too. The end of 2008 marked the beginning of gold’s second bull market for this millennium. After wallowing under $1,000 during much of the second half of 2008, it got its footing during 2009.

Very often when an asset is moving sideways and/or slightly declining, it’s typically called “consolidating,” which is essentially building a base or launchpad for the next move up. Sometimes consolidating is done in a few weeks; sometimes it’s much longer, perhaps months or years. But if demand and supply is strong or somewhat favorable, the upmove — bull market — eventually returns. And usually it potentially means new highs.

This was the case for gold in 2009. Gold languished under $1,000 during much of the first half of 2009; it came close to cracking the $1,000 level twice but failed. The $1,000 level was “resistance” (a technical analysis term explained in Chapter 15), and gold didn’t finally crack it until September 2009. At that point, the $1,000 level became “support.” Usually, once you soundly break resistance, it can become your new support as the asset keeps moving upward.

With corrections along the way (common with most bull market moves), gold zigzagged its way to a new all-time high. On September 6, 2011, gold hit $1,911.60. For gold, this was a brief visit above the $1,900 level, and its second bull market ended before a long, multiyear bear market and consolidating pattern ending in early 2019.

Bull markets are long moves punctuated with corrections along the way. A correction is usually a 5 to 10 percent move, although it could be deeper but not more than 20 percent because that’s considered technically a bear market. A bear market is a long move downward punctuated by brief rallies along the way. I tell readers in my book Stock Investing For Dummies (Wiley) that if you choose wisely (using fundamental analysis), it will zigzag upward. If you don’t choose wisely, it will zigzag downward.

Welcome back to your current time — uh, the present! And welcome to what is possibly the third and best bull market for gold. I say that because the scale of factors is much greater now than before and certainly greater than the prior two bull markets discussed earlier in this chapter.

As of early 2019, the bull market was taking hold. Gold’s price started at $1,282 and then traded sideways in the $1,250 to $1,350 channel for much of the first half, but the bull market started in earnest by summer. Gold ended 2019 at $1,520 with a solid gain of 18.5 percent. And it was just getting started!

For 2020, gold was one of the top performers given how chaotic and problematic the year was. With stocks both crashing and rallying while the economy was hammered by the global pandemic and strict government lockdown, gold soared from $1,520 to new heights in August 2020 with a gain of 28 percent, with a third of the year still to go!

News flash! For the first time ever, gold hit $2,000 per ounce on August 4, 2020. It went on to hit an all-time high of $2,089.20 as of August 7, 2020 (gold futures, intra-day high). As I write this, the price took a break and pulled back below $2,000.

In the 1970s, there were aggregate dollar moves of assets and markets in the millions; in the 1980s and 1990s, it was billions. By the first decade in this millennium, we were talking about trillions, and now, circa 2020–2021, we are in the tens of trillions. The world is now facing many trillion-dollar problems, and gold is better situated than ever for getting through the storm — multiple storms.

In the sixth edition of Stock Investing For Dummies (Wiley), I detail ten challenges and pitfalls during 2020–2030 for stock investors. I could have easily placed that information in this book and titled it “Ten opportunities for gold investors and speculators.” Here are some of those challenges that face not only stock investors but the world at large:

Trillion-dollar pension shortfalls

Bond and debt bubbles

Social security shortfalls

Currency crises

Read the full list at www.dummies.com/personal-finance/investing/stocks-trading/10-investing-pitfalls-and-challenges-for-2020-2030 and view them as solid reasons gold will do well. Between favorable demand and supply factors coupled with the trillion-dollar issues with paper assets (bond bubble, debt defaults, and so on) and conventional currencies (such as inflation), you have a perfect storm for much higher gold prices. Get some gold for yourself soon.

Текст предоставлен ООО «ЛитРес».

Прочитайте эту книгу целиком, купив полную легальную версию на ЛитРес.

Безопасно оплатить книгу можно банковской картой Visa, MasterCard, Maestro, со счета мобильного телефона, с платежного терминала, в салоне МТС или Связной, через PayPal, WebMoney, Яндекс.Деньги, QIWI Кошелек, бонусными картами или другим удобным Вам способом.