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Friday, March 11, 2016
The price of gold is up 21% since the middle of December... from $1,051 an ounce to $1,270.
That's its biggest rally since gold peaked in 2011...
And historically, such big rallies are almost always followed by corrections – periods when prices fall.
That's why conventional wisdom says, "If you missed the initial rally, buy on a pullback."
"Buy on a pullback" is good advice for lots of people. If you own some gold and have a little money in gold stocks, you'll likely be able to add to your positions soon, at better prices than today's.
That's what I plan to do personally. And that's what I recommended to readers of my newsletter, DailyWealth Trader (DWT).
But the biggest risk you face with gold today isn't buying just before a sharp correction. It's the possibility that there won't be a significant correction, and that you don't own enough gold... or worse, any at all.
I consider physical precious metals – especially gold and silver – an important part of any "catastrophe-prevention plan." I like to think of them as an alternative form of savings.
They're not a replacement for cash. I suggest holding cash, too. But cash has a major flaw... Governments can, and do, print massive amounts of it.
Just as creating more shares of a company makes every other share less valuable, adding cash to the existing supply makes it less valuable, too. Over time, your cash savings buys less and less.
On the other hand, gold and silver have been used as money for thousands of years. Governments can't print gold and silver on a whim, as they do with paper currencies. So people turn to these metals when they're worried about the value of their cash declining.
Plus, now negative interest rates are spreading throughout the world... which make it harder than ever to save.
As Steve Sjuggerud said in the latest edition of his True Wealth Systems advisory, "The logic is simple... When both gold and paper pay you zero-percent interest, you should prefer gold over paper."
With that in mind, let's take a longer-term look at gold. The 15-year chart below shows the big bull market that took the price of gold from around $250 an ounce... up to $1,900 an ounce... and back down to around $1,270, where it is today.
If you don't have at least 5% of your wealth in precious metals – and you're not buying because you're waiting for a correction – take another look at the chart above...
This IS the correction. It's time to buy gold. While you're at it, buy silver, too. It's cheap relative to gold. You can also buy the physical gold and silver closed-end fund ("CEF"), which currently trades at a 5% discount to the value of the gold and silver it holds.
Trading gold stocks is a little different. They're not stores of wealth, like physical gold. But they can produce extraordinary returns when gold prices rise.
If you already own gold stocks, congratulations. You may want to wait for a pullback before adding to your positions.
If you don't own any gold stocks, you should consider "dipping your toe in" today. Buy some now... and hopefully you'll get a chance to buy more at better prices.
Gold will pull back at some point. But there's no guarantee it will pull back soon... And there's no guarantee that when it does, it will come back down to today's levels or lower.
This could be the best day to buy gold for the next 20 years.
"Lots of people in the U.S. are predicting a new uptrend in gold, starting now," Ben says. "But gold is already in an uptrend around the world. It has been for two years." Learn more in this Growth Stock Wire essay.
On Tuesday, Brett Eversole told readers why gold could climb nearly 20% in the next 12 months. "Yes, gold has done well... but based on history – these solid recent gains tell us that we could have more to come..." Get the full story here.
ANOTHER BIG 'BASICS' UPTREND
Our "selling the basics" approach is working once again...
Investing in companies that sell the basics – the everyday essentials that people purchase without even thinking twice about – is one of the most powerful ways to steady, long-term wealth. We've shown many times in the past that selling cigarettes, soda, and booze tends to work better over the long term than selling the latest technology.
The latest example of this theme at work is personal-care business Kimberly-Clark (KMB). The $47 billion consumer-products giant sells some of the world's most recognized paper products, including Kleenex tissues, Huggies diapers, and Cottonelle toilet paper. Nearly 25% of the world's population uses Kimberly-Clark products every day.
It's no surprise KMB shares are riding a long-term uptrend, as you can see from the chart below. The company is up more than 100% over the past five years and recently hit another all-time high. Kimberly-Clark may never be the next "hot" stock tip, but it's more evidence that selling boring products works...