When to Buy Gold in the Coming Correction

What is going on?

Terrorist attacks are becoming more abominable at every occurrence; people are shooting cops in the US; post-war Europe is breaking up; and now there’s a coup — or possibly a fake one — in one of the world’s most strategically important countries, Turkey.

There are complex reasons for all of these events. Reducing it down to a single ‘thing’ is fraught with danger. But I’ll have a go anyway…

It seems to me that the world is reacting to a kind of economic headlock, produced by distorted monetary policy and overwhelming bureaucracy by the ‘elite’ — both elected and unelected policymakers trying to ‘central plan’ the world into their own vision.

This type of stealth dictatorship is a force that is eventually met by an equal and opposite force. You’re seeing that manifest in the form of hatred all around the world.

Don’t get me wrong, I’m not trying to justify or excuse the hatred that is bubbling all around. I’m just trying to make sense of it.

At a slightly saner level, the response you’re seeing to this economic upheaval is the rise of political populists like Donald Trump. His rise is in direct response to the ongoing stagnation of the US economy. Don’t be fooled by the S&P 500 breaking out to all-time highs. That is a symptom of financial repression, not of prosperity.

The ‘people’ aren’t enjoying the uplift in wealth that the stock market brings. Instead they have to deal with stagnant wages and job insecurity. Trump provides an outlet for their fears, hence his popularity.

He also provides an alternative to the perceived corruption of the Clinton’s, who are representative of the global ‘elite’. The irony is rich for the US here…

The country was founded on the rejection of both the monarchy and hereditary rights (and the ability of these rights to tax from afar). Yet in the past few decades, you’ve seen Bush senior and junior rise to the rank of ‘commander in chief’. Now, there is the prospect of another family dynasty rising to the top again…the ‘Clintons’, perhaps the most insidious power family in US history. And that’s saying something.

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While there are no good choices for the US in the upcoming election, maybe this is why Trump doesn’t seem so bad. Not to me, anyway. Or maybe it’s my fondness for the Back to the Future trilogy, and the way Trump reminds me of Biff Tannen in the alternate reality of Part II of the series.

You remember how it goes…future Biff travelled back in time and gave his younger self a sports almanac with 50 years of sporting results. Young Biff used this information to punt his way to wealth and power. This led to a very disturbing future, the centrepiece of which was a massive casino (a bit like today’s stock market).

Here’s a picture of the ‘alternate, powerful’ Biff, who looks disturbingly like Trump…

Source: The Wrap
[Click to open in new window]

I’m getting off the point here, but when the potential leader of the most powerful nation on Earth resembles a caricature, it’s time to take stock.

And this is how it looks…

We have megalomaniacs centrally planning their way around the world. This is stunting economic growth, while ensuring the upper levels of society get a greater share of this shrinking wealth. In response, you’re seeing a tidal wave of ignorance and hate — in the form of terrorism — lash out against this.

Is it any wonder that the price of gold is on the rise? As we head into a US election, gold is simply a must own asset. If you’re yet to bolster your portfolio with bullion or gold stocks, don’t worry, it’s not too late.

Gold is in the process of correcting lower after experiencing a very strong run. I wouldn’t be surprised to see it fall back to around US$1,300 an ounce — or lower. The correction continued in Friday’s US trading session, but news of the coup in Turkey saw it jump higher again late in the day.

With the alleged coup now under control, gold is under pressure again across Asian markets this morning. As I write, it’s trading around US$1,330 an ounce.

In my view, this correction is a buying opportunity. Whether it will play out for just a few weeks, or over a few months, I don’t know. But I do know that all rising markets need to pause for breath from time to time, and gold is no different.

So use this period to your benefit. If you’ve been thinking about adding some gold stocks to your portfolio, now is the time to act.

To help you out, I’ve just put together a special report on gold, including what I think are the five best gold stocks on the Aussie market — and instructions on when to buy during this coming correction. I also provide strategic stop-loss points; so if I’m wrong about gold, you’ll know when to get out before your portfolio takes a big hit.

To access the report, you can start by clicking here.


Greg Canavan,
For Markets and Money

Greg Canavan
Greg Canavan is a contributing Editor of Markets and Money and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to Markets and Money for free here. If you’re already a Markets and Money subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Markets and Money emails. For more on Greg go here.

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