Forum Archive Index - February 2003

["Nick McCaw" <nick.mccaw@golearn.co.nz>]

Snoopy, a good question.

 

And Gooner, a superb post on war and gold etc.

 

Too ask if people will buy gold is secondary to asking if they will buy gold stocks. I agree that few mums and dads will actually get involved in the bullion market. If there is any truth to the view that the US monetary system will come under pressure, then physical gold will be under enough pressure from institutions including governments and banks.

 

Which leaves the gold stocks to be the domain of Joe Public. And why will they buy gold stocks?, most probably because they are basically stupid and lazy. They will buy for the same reasons that we bought tech stocks in 1999. Because the media, the broker, the advisor, the fund manager, and probably the shoe shine boys will be hyping it like $2 jugs at a student pub. We are normally so damn lazy that we wait to be told what to invest in and accept the instructions verbatim.

 

It is a little presumptuous to think that this is exactly the way it will all play out, but the point I make is that the gold stock market will be where the masses will really make the big push before it all falls over. The good thing is that you will see it happening all around you if it actually happens. The key will be to keep a level head and get rid of all that glitters while your neighbor is just dipping his toes in the gold bull market.

 

If you were looking for a commodity to store some cash in, silver might be a better bet at this time. Either way, it won’t explode like a resource stock if this market really gets running. Once again, just be smarter than the masses, and that probably means buying some exposure to this market sooner rather than later if you believe the story. Otherwise stay out until there’s a golden bull on the cover of TIME and then buy a long term short futures contract.

 

Enjoy the weekend – happy investing.

 

Nick McCaw