From Jeff Clark, Senior Precious Metals Analyst, Casey Research:
I know an investor who is feeling some regret. He’s come to the sinking conclusion that he may have made a mistake selling his gold stocks.
He recognizes now that he reacted emotionally to the crash, panicking at the plummet and dumping everything regardless of quality. He’s kicking himself for doing so, because he succumbed to an impulsive move, locked in a loss, and realizes that the core reasons for owning gold haven’t really changed.
Obviously some investors believe they made the correct move by exiting the sector; they’re convinced gold is a dead trade and will be a losing investment going forward. My investor friend thought so too for a time, but now thinks he may have acted too hastily.
I think sellers abandoned gold equities prematurely on weak grounds, and will be back when that becomes obvious, joined by even bigger numbers of new investors.
The ultimate issue with gold stocks is whether gold itself will rise or fall. If it rises, gold stocks will get pulled up by the metal – and then deliver the leverage they have so many times in the past. If it falls, even today’s profitable producers will suffer.
There are key reasons why I think gold’s trend will resume its upward course, and why sellers should’ve paid a little more attention to the “advertising” before dumping their shares…