Martin Murenbeeld, the Chief Economist at Dundee Wealth Economics and a noted gold analyst, fears that gold is vulnerable to a sizable correction (drop in price) while resource industry icon Rob McEwen makes a case for $5000 gold and $200 silver — in four years! What to do?
This may be a “trading opportunity” for speculators plying for quick profits, but physical gold (and silver) investors need to hold their positions.
Even if Murenbeeld is correct, multiple challenges arise for sellers at these levels. First, taxes would be incurred on profits. Second, sellers would be out of the metals at a time when near chaos reigns in the financial markets. Third, determining a re-entry point is difficult. Fourth, and I’ve see this often, having the discipline to re-enter the market on a drawback requires nerves of steel. Too often, traders will not re-enter the market at all because they are constantly looking for still lower prices and are left on the sidelines are prices roar to the upside, passing sellers’ original exit prices.
While reading the Murenbeeld article, keep in mind that he is a bull and is only advising clients that gold is vulnerable. He is not necessarily recommending that investors try to trade this market.