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 email@example.com or at 800-477-7853.
This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.
Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and nowadays also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.