It’s a sort of dance. Like every dance, it has a rhythm to it. The beat lasts about 17 years. This is the alternating cycles of share price and commodity booms.
When world stock markets peaked at the end of 1999, anyone who had any money was pouring it into stocks. It was the greatest bull market the world had ever seen. There was talk of the internet changing everything, and the new paradigm.
We have already seen the highs in the gold price
Mention gold and people would just laugh; surely that was the one thing you shouldn’t buy? Gordon Brown was so confident about this, he started selling down the UK’s gold reserves.
I think you know what I will write next. This was, of course, the best time to buy gold. At the turn of the century gold was valued at $283 per ounce. The gold price peaked in 2011 at $1900 per ounce. Anyone with the gumption to buy in 2000, and the patience to wait out the fluctuations and the panics, would have made a lot of money.
Of course, the time to sell gold was during the Eurozone crisis of 2011. It will be decades before the price ever reaches these heights again.
That’s why I don’t really even like to think about gold. To me it is the past. The trend in rising gold prices is basically over. A strong down trend is now in place. I sold my gold around 2011 and 2012. Any price rises that take place over the next few months are opportunities to sell what is left of your holding, and not to buy.
Of course, this article would be completely different if I was not writing about gold investing, but gold trading. There can be short term rises and falls in the gold price at any time; no-one can really predict this, and it is not something I would even attempt to try.
Now is the time to buy shares
These days, if you mention shares most people will look at you and just laugh. But many still talk about gold.
So you can guess what I will write next. If you have a substantial holding of gold, I would be steadily selling it down over the next few months. And I would use the money you make to buy into shares.
Each equity investor has their own approach, but I am planning to buy into UK small cap shares, as well as emerging market funds, with a particular emphasis on China and India. Why? Because this where the growth is. Yet investors haven’t yet noticed.
My wife loves jewellery. Beautifully-designed jewellery will never lose its lustre. But I hesitate to buy much now.
But that doesn’t mean I’ll never buy gold again. After all, around about 2035 or 2040 I’ve pencilled in my son’s wedding….