+ the phases of a gold boom +

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Subject + the phases of a gold boom +
Posted 09/11/04 01:40 - 167 reads
Posted by stolwyk
Post #411901 - in reply to msg. 411889 - splitview

Gold is held by many Institutions, eg Banks, funds and investors, either big or small.

There are a number of phases in a bull period:

1. The Discovery phase which we have at the moment: It is best to get Investors familiar with the metal, how it is traded, the advantages and disadvantages of holding the metal and goldstocks.

The different types of gold stocks, where to obtain the metal and gold stocks and prices. The conversion of US gold prices to Australian values (Kitco).

The different ways of investment, including ETF's (Exchange traded funds)

Some easily understood economic theory.

It is not a good idea to overemphasize prices obtainable at the apex of a bull run because it may be counter productive.

Instead it should be shown that gold and silver can be very good investments at a certain time.

At the end of this phase, there is more publicity from different sources.

2. Widespread acceptance of gold as an investment.
At this point, the metal is being bought more than before, one is not considered to be fool talking about gold. Something is occurring which drives up the price of gold.

Acceptance is easier if sufficient time has been spent on item 1. The discussion now ranges from companies to select, souvereignty risk, location and other risks.

In the meantime articles and discussion about different methods of investments, the $US and perhaps other currencies are worthwhile discussion items.

Gold is now taking a prominent place in Press sources.

The price of gold is rising.

3. The flight to safety.
Some countries will come into focus because of an extraordinary uptake of the metal due to the currency being eroded or for any other reason.

This may have a chain effect and as a result, investors want more gold either for profit purposes or to cover their other investments or both.

Gold and silver now become frequent topics and a lot more posts appear.

All facets of the gold/silver industry are being discussed by various channels at certain times.

The gold price increases faster because of world wide demand. Retracements do occur.

4. The Apex.
If this comes about, then gold has its own momentum. There are always speculators but now their activities increase.

Prices rise at a phenominal rate. Fortunes are made. Previously little regarded mining stocks suddenly have an exceptional value. Many takeovers are made at too high prices.

Investors are not worth talking to, unless they have at least some metal or gold stocks.

Gold is now taking a prime place in publicity.

5. Correction-Finding a price equilibrium.
On the markets, demand at too high prices is finally met while the supply is continuing. This results in a retracement and its severity depends on the degree of over valuation of the metal as decided by the precious metals markets.

In that case, many people who joined in too late could lose a fortune. Others will see their profits cut back.
Gold and silver will finally find a price equilibrium.

Gerry