Gold drops below $1400/oz

In the last six months there has been an avalanche of advice from the financial industry telling you, as the private investor, to hold some gold in your investment portfolio. If you are one that has followed this, then today you must be feeling a bit sick. During this time the price of gold bullion has dropped by 25%. The argument for holding gold was good. If the financial world was to collapse again, then gold is an insurance against the destruction of paper currency. Even if there were not to be a collapse then the demand for jewellery from the growing Emerging Market populations should cause the price to rise. I do not have any disagreement with these arguments. The question is, just when should you make your purchase?

Why would you buy when the price is falling? How do you know when it will stop? Why would you try to guess the bottom of the market? Last week an acquaintance of mine said he was going to buy because it had fallen so far, surely it could not fall further. Well in the next three days it has fallen a further 10%!  I would suggest that you simply watch the numbers on a graph and stick it out until the price of gold makes a positive upwards move. Leave prophesy to Gypsy`s, members of the Church and Politicians. Better still why not follow the numbers produced by the Saltydog Investor.image

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