-- Posted Friday, 10 December 2004 | Digg This Article
Friday, December 10, 2004
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Investing in Gold and Silver...What To Do
By Dr. Steve Sjuggerud
President, Investment U
Silver has been obliterated in the last few days...
- Dec. 7 close: $7.82 per ounce
- Dec. 8 close: $7.08 per ounce
- Dec. 9 close: $6.74 per ounce
And gold is down by $15 an ounce. It's ugly out there right now in precious metals in particular, and commodities in general.
So what do we do about investing in gold and silver? I did what I do today... I hit the phones. I talked to the best commodity guys in the business to get their thoughts on gold and silver, and I also checked in with my recommended coin dealers to see what they were thinking. Here's what they had to say...
First, the commodity pros: The two folks who know commodity trading better than anyone are Chris Foster and Dennis Gartman.
The Best Commodity Experts In the Business
I'm no expert on commodities. I know next to nothing about oil, quite frankly. I rely heavily on my friend Chris Foster, who is a broker for Scotia Capital in Toronto. Readers of my True Wealth newsletter may recall that Chris predicted $50 oil a year ago in my newsletter, when nobody thought that could be possible.
Today Chris said we're in "uncharted territory in commodity trading and currency trading, as the market has broadened out so dramatically in recent years with new participants and new products. We have to go back a generation to see individuals in commodities like they are now.
"Quite frankly, we've been curious to see how they'd respond. How price sensitive are these people? Well, we found out with silver investing. These were the 'weak' hands that got shaken out."
What about oil, Chris? (I had to ask...)
"There's heavy bearishness in energy now. The market is now expecting a China slowdown. I see it as a story you can fade, as China isn't going away... I'd go back into oil soon."
Dennis Gartman writes the fabulous daily e-letter, The Gartman Letter. Like Chris, he's been following commodities for decades - daily. Dennis told me today that gold could trade back to the $400 range "over the course of the next several weeks, as the public, hedge funds, and mutual funds liquidate their positions. A drop of that magnitude would be well within the well-defined confines of a long-term bull move..."
So gold could fall down to $400, and it'd still be a bull market...
Comments from the Physical Metals Dealers...
I contacted all of my recommended coin dealers for their comments on investing in gold and silver...and here's what they had to say:
Burt Blumert specializes in raw gold coins, both 100-year-old ones and new ones. He hasn't seen any fallout, yet. "We can't even get American Eagles. The mint closes for the month of December. No coins until 2005. It used to cost us a 3.6% premium over gold to buy these things. But because the market has been hot, we're now paying more. We haven't seen any selling."
Van Simmons specializes in the high end of the rare coin market. He wasn't particularly fazed. "Gold and silver got ahead of themselves. It happens. I've been advising easing into coins here, at the right price. In the long run, these jumps up and down aren't going to make a difference."
Dana Sameulson specializes in the area between Burt and Van. Dana doesn't want to fight the trend. While he's bullish on gold investing (can you be a coin dealer if you're not?), he says, "This is a moving train that hasn't quite stopped yet. Wait for a bounce to signal the bottom." Then start buying. Dana sees opportunity in $10 and $20 old Liberty coins, in MS64 and MS65 grade.
The folks at Asset Strategies like silver over gold at this point. They see "limited downside for silver" from here.
Well, that brings you up to the moment on gold and silver investing, from the guys that do this every day. The pros think that commodity prices could continue to fall - including gold falling down to $400. But they will likely stabilize there, and the bull market trend will not have been broken in gold.
The ride could be rocky, but worth staying on board from here...
Good investing,
Steve
Dr. Steve Sjuggerud, President of Investment U
Dr. Steve Sjuggerud is the voice behind The Investment U E-Letter, a free, twice-weekly e-mail publication that reaches out to more than 265,000 readers with sound investment research and research to help them become more savvy investors. Dr. Sjuggerud is also the Editor of True Wealth, one of the fastest-growing investment newsletters in the country, with more than 65,000 members worldwide. He's also a former Investment Director of The Oxford Club and an expert on global investing and emerging-market currencies. During his far-reaching investment career, Dr. Sjuggerud ran a global mutual fund, directed his own offshore hedge fund, and served as the research director for an international investment advisory firm. Dr. Sjuggerud is often quoted in places like WSJ.com and Barron's, and he is the co-author of the New York Times Business Best Seller, Safe Strategies for Financial Freedom.
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-- Posted Friday, 10 December 2004 | Digg This Article
