Over the past 45 years there have been 7 bull cycles and 7 bear cycles with varying duration and percentage gains.
On average, from the bottom of a bear market to the top of the bull market cycle, gold equities have risen approximately 500%. Better bull cycles have yielded returns of up to 760%.
No bear market was as horrific as the one just experienced from October 2012 until mid-December 2015. Does that mean that the new gold market we are currently in will last longer and provide opportunity for even stronger gains than those experienced in previous bull cycles? Only time will tell.
Since the start of 2016 many gold equities are up an average of over 110%, and several are up more than that.
Only one year ago, during the depths of an ugly bear market, many investors said repeatedly that they had been so disappointed that they would not enter the gold equity space until they could clearly see in the rear view mirror that the bear market was behind them. Those investors were comfortable leaving the early money on the table. They were willing to exchange peace of mind of not buying in only to find it was another false start and quickly riding their stocks lower yet again.
Eight months into this year, it certainly feels and looks like the bear market is behind us.
In late January, when the Bank of Japan announced that negative interest rates were here, gold and gold equities exploded to the upside catching a lot of investors sitting on the sidelines.
With gold and silver equities up so far this year this should be a good time for investors to start positioning themselves on any pullback in gold prices or while gold trades range bound as it has been recently.
The Bank of Japan’s interest rate policies at the year’s start, along with international quantitative easing, slower global economic growth, Brexit and low oil prices have resulted in less revenue for many countries This has helped make gold a much more favorable store of wealth. These reasons continue to be intact and it is hard to see why those sentiments are about to change significantly. This further supports the view that we are in the early stages of much longer bull cycle yet to come.
The most logical approach is likely to move in to good quality equities averaging in over time while also hoping to catch some of the dips.
If you have questions regarding this article, please contact your Sprott Global financial advisor or the author Steve Todoruk at stodoruk@sprottglobal.com or at 800-477-7853.
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Source: http://sprottglobal.com/thoughts/articles/gold-equity-market-cycles/
