As I wrote last week, gold investors are now in a psychological bear market. Prices aren’t really declining. Gold is not in a stage four bear market, but instead is going sideways in a long drawn out consolidation phase. I have been trading and investing in gold now for 19 years and during that time it has gone through multiple periods like this, some of which last for almost two years. This one is now going on fourteen months, as gold made it’s last price peak in the first week of August of 2020.
Sideways up and down markets drive people out of those markets as people lose interest in them. This is evidence in this video done by someone at the Denver Gold Investing Conference yesterday morning. No one is there, not even in the main speaking hall.
There is ZERO interest among the masses in gold. ZERO. https://t.co/naSidssASi
— Mike Swanson (@tradermike_1999) September 14, 2021
And here is another Tweet from someone else at the conference.
#DenverGoldForum
— Ronnie Stoeferle (@RonStoeferle) September 14, 2021
The bottom must be in soon.#socialdistancingmadeeasy pic.twitter.com/152CcK8tFy
There are different reasons people trade and invest.
One is to chase momentum. In today’s markets that is typified by the Robinhood trader and the millions of people that have gotten into trading in the past twelve months. They tend to buy things going straight up and look up to people like Cathie Wood and buy what others are buying on the Robinhood app, often with no idea of what it is that they are buying and no care about that, which is how things like Dogecoin can become fascinations for a few moments in time.
Since gold is not going straight up they have no interest in it and right now they dominate the trading niche.
Another reason people trade and invest to buy something cheap when no one else is interested. In other words getting in early.
That is what gold and mining stocks offer now.
But that means going against the psychology of the disinterest of the masses and the psychological bear suffering of those in gold now. That’s why Marc Faber says now is not the time to sell. I think he is right. In fact I don’t see why now isn’t a good time to buy, because a gold close above $1840 would be enough to start to get sentiment shift and buyers into mining stocks.
The bottom line is buying gold NOW with this type of sentiment is the opposite of buying Bitcoin in December of 2017 or this past March, or Gamestop earlier this year too when it hit the TV news cycle and everyone and their child was buying it on Robinhood thinking that the markets were changing for ever, because of their app and the Reddit group.
Whatever you buy in the markets, and no matter whether you are a short-term trader or investor, success in the long-run is going to be determined by a good money management system.
-Mike
