Sometimes I see an important economic or geopolitical event in screaming headlines and think: “That’s bullish for gold.” Or: “That’s bad news for copper.” But then metals prices move in the opposite direction from the one I was expecting. Doug Casey always tells us not to worry about the short-term fluctuations, but it’s still frustrating, and I find myself wondering why the price moved the way it did.
As investors we’re all affected by surges and sell-offs in the investments that we own, so I want to understand. Take gold, for example. Oftentimes we find that it seems to tease us with a nice run-up, only to give a big chunk of the gains back the next week. And so it goes, up and down…
The truth is—and it really is this simple, but so obvious that people forget—that there are always rallies and corrections. The timing is rarely predictable, but big market swings within the longer-term megatrends we’re speculating on are normal in our sector.
Since 2001, the gold price had 20 surges of 12% or greater, including the one that kick-started 2014. Even with last year’s seemingly endless “devil’s decline,” we got one surge. If we were to lower the threshold to 8%, there’d be a dozen more and an average of three per year, including two this year.
Source Gold Survival Guide
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