Gold/silver is not a marriage contract that states for better or for worse, sickness or in health. When the time comes, you need to sell it off to realise your profits.
Before i start talking about the signs of when to sell, lets discuss a bit about asset classes, and how they follow each other. In history, these signs have always played out, some more significantly then others. Others are directly track each other, some have lag times.
My Theory of Asset Class Movement
Ok granted, it may not be lines that have sharp turns, but perhaps gradual curves, but the general direction i believe should be highly correct.
Understand this concept Wealth Cycles. The economies of the world plays out in this fashion for thousands of years, one asset class will become overvalued and eventually fall, while another asset class from being undervalued rises. The old overvalued asset then become undervalued. Vice-versa.
The Art of Selling Gold/Silver is to correctly predict where roughly the peak of its wealth-cycle will be, sell everything and pump it into an asset that is undervalued.
Remember the stockmarket and dot.com boom, where everyone left their day jobs. Stocks was at an all time high, commodities was very low in price, gold was less then 200 dollars an ounce. (Today it is around 1370 US dollars an ounce).
We used to see the first graph applies to the direct relation between stocks and commodities, when stocks began declining, gold went directly up. However not today. With the manipulation of money (printing, silver/gold shorting, rumor & fear mongering and quiet acquisitions), the pattern of gold and stocks/bonds now follow closely the pattern of how commodities relate to property prices.
Happy Identifying the next undervalued asset class! You must know what to put your money in once gold/silver becomes overvalued. (But i believe, we are far from that day, still relatively far)
Factors that Signal the Time to Sell gold
Watch the Dow-Jones Index:
Historically in times of crisis, the price of gold rose and the dow jones fell to 1:2 and even 1:1 ratio. Meaning eg. Dow Jones fell to 8000 points, gold rose to 8000 dollars/ounce. Meaning you can buy a share of the Dow Jones with just an ounce of gold.
Currently: Gold: 1370/oz, Dow Jones: 12,092/share (we are still far off, relax)
Watch the Consumper price Index & Food prices:
This is simple, when the CPI jumps in double digits and above 20%, we are getting near an exponential increase in gold's price. When your plate of rice or noodles start costing 10 dollars for a simple meal, the end is near. You can feel it, your wallet will be screaming.
Watch your News papers, including business times:
The media especially in Singapore is slow to catch on, they are part of the herd, when gold rises and inflation hit the streets, people will all be thinking gold is the best investment and dump all their money in it. This will make the price of gold skyrocket, but incidentally, this is the time when you want to hold the trigger button that connects to the word 'Sell!' and squeeze it at a moments notice.
There are many more indicators, but these 3 points should be enough for you guys to keep in mind without forgetting.
So what are you doing with your money? :)
This is really a great article to read. I learn many things from you. Thanks for sharing.
ReplyDeletesell silver