Gold stocks seem cheap

09-Aug-2011 Gold is doing exactly what we expect it to do right now. No surprise for regular readers who are probably bored sick of my "buy gold" message. Those who have followed my example will be counting their profits on a daily basis right now. Of course there will be corrections along the way, as there always is, but look at my 5 years and 10 year gold graphs to see what a great investment the precious metals really are.

The bottom line? Who can have any faith in paper currency when it is being printed at will?

If you are a regular reader of my newsletter please don't tell your kids you knew that gold was going to rocket in price and did nothing about it. You are either a speculator or a spectator - and I would like to think that every reader is profiting from the current price rises.

What is strange though is that my gold mining stocks are going down right now - not up. How bizarre. With the current increase in gold prices the miners will see that price increase go straight to their bottom line.

My view is that the big miners in my share portfolio are a good buy right now - namely Barrick and Goldcorp. Both of these have given me double digit returns since I bought them, up 18% and 27% respectively per annum. I see that continuing into the future and feel it can only be a matter of time before the markets realise that they might have thrown the baby out with the bath water.

Right now the dip has given me a chance to top up on gold miners at a knock down price. I have even topped up on Transatlantic and Stans energy as they find themselves in the Bargain Basement section. That's the thing with a sell-off. Everything gets sold at a knock down price as the herd tramples all before it. As always, it may seem a bit odd being a contrarian. You have to buy when the price is low or when everyone else hates it, and then you have to sell the stock when it is high and everyone loves it.

But that's how it works. If you don't do this you will be buying high and selling low.

You will feel good because everyone says you are making the right decision - pity you don't make any money with this technique eh?

See "My Portfolio" in the members area for more details.

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