Gold Stocks – Will They Help Your Portfolio?

| March 24, 2015 | 0 Comments

gold22 Reasons “THEY” Say To Buy Gold… And The One Real Reason! 

Gold prices are down and down big (38.6% the last time I did the calculation).

Gold Prices Down 38 percent

But, you don’t need me to tell you that…

What I do want to say is the continued fall in gold prices presents savvy investors a huge opportunity to make money.  Right now I see one big reason you should be investing in gold (in a special way)… more in a moment.

But before we go to my thoughts on investing in gold… let’s take a quick spin around the internet and see what others are saying.

I did a few Google searches and came up with a ton of reasons to own gold… some were right… some wrong… and some really stupid!

Here’s what I found (22 reasons to start)…

  1. Gold has a history of holding its value.
  2. Gold can pass money from one generation to the next.
  3. Gold combats weakness in the US Dollar (I guess they didn’t get the message the US Dollar is up.)
  4. Gold Combats Inflation – just like a bunch of other assets…
  5. Gold Combats Deflation – funny how it works both ways!
  6. Gold Protects You From Geopolitical Uncertainty – If you think your government might collapse, ask for your paycheck in gold!
  7. Gold Suffers From Supply Constraints – In other words, mining output is slowing… isn’t that expected with prices falling?
  8. Gold is seeing increasing demand – Now this is huge… I’ve got two words (China, India).
  9. Gold is good for diversification
  10. You can own Gold anonymously – just don’t use your credit card to buy it.
  11. You can store gold at home – Gold can also be stolen from your home.
  12. There are plans to return the US to a gold based monetary system – Yea right, when pigs fly!
  13. Buy gold because of the inevitable collapse of the US Dollar – You think way too negatively my friend…
  14. Buy gold because the derivative time bomb is quickly approaching… I guess we need to fear something!
  15. This is a direct quote from an unnamed website – “Growing recognition that many paper gold products do not have the physical gold backing that is alleged” – I think the guys running the Gold ETF industry would be pissed off at that one.
  16. Buy Gold because Gold is being purchased by central banks…
  17. Buy gold because there’s a huge amount of skepticism with respect to US gold reserves
  18. Buy gold because the gold market is small in size… (Given that logic we should be buying beanie babies and baseball cards too!)
  19. The 98 Percent Rule says buy gold – Nobody can explain that rule – does anyone know?
  20. The Gold Bugs are paranoid – so buy gold!
  21. Buy Gold because you can’t trust the government – Which government? All of them?
  22. Buy Gold because of negative real interest rates – isn’t that similar to the inflation threat?

I’m sure there’s more than these 22 reasons I found… but I got tired of looking.

As you can see, some of these are right, some are wrong, and some are conspiracy theory stupid… But in my mind, all 22 of these reasons to own gold are wrong.

I see it very simply.

There’s only one reason – and one reason only to buy gold.

Why You Should Really Buy Gold… 

Here… scoot in… I’m going to whisper a secret to you.

There’s really only one reason to buy gold…

You Should Only Buy GOLD To Make Money!

Let me say that again.

The only reason to buy gold – it’s to MAKE MONEY.

Look, if you want to stockpile gold for the end of the world, the collapse of the government, or the devaluation of the US Dollar… be my guest.

But for me, gold is an asset you buy and sell to make money.

So, please don’t be upset when I fail to spout off rumors about the Federal Reserve seizing gold from little old ladies… and devaluing the dollar in hopes of collapsing the shadow economy… which is of course operated by the Family of Seven.

I just don’t buy it.

The only reason to buy gold is to make money.  It’s the same reason I buy penny stocks.  It’s why I own real estate, and bonds, and REITs, and well… any investment.

So, now let me drop some education on you.

There’s one big way to profit from gold… and it doesn’t involve buying gold at all.  Nope… to really profit in gold, you want to buy gold stocks!  Specifically Gold Penny stocks.

The Best Way To Buy Gold – Buy Gold Stocks

Look, if you follow gold and gold prices, you know a few things…

First, gold prices are down because the US Dollar has been very strong lately.  It won’t last forever… and when the US Dollar stabilizes, gold prices should stabilize as well.

Second, China and India are huge buyers of gold.  Specifically their middle class sees $GOLD as an important item to own and hold… As their economies recover and continue growing over the next decade, it will create huge levels of demand for not only gold, but other precious metals.

Third, gold prices have been falling since 2011.  That means producers who have not been able to lower their product costs have been forced out of the market.  Businesses have shut down and mines have been shuttered.  Supply has been removed from the market.

Take those three things and long term you can’t help but have a positive future outlook on gold… no economic collapse, government turmoil, or monetary devaluation is needed!

The problem is… the turnaround might start today… or five years from now.

Timing is an issue.

So, how do we invest and still profit?

A Quick Way To Analyze Gold Stocks

You start with gold mining companies… these are firms that have proven their ability to produce gold at these levels and still make a profit.  They can grow – even in the face of declining prices – and that’s a good thing for investors.

Profits are critical in these types of investments.  Profits keep strong businesses stable in struggling industries.  Profits are what keep one gold mining company alive and producing, while their neighbor shuts down operations.

The other thing you want to do is focus on the smaller companies.  They are more nimble to market movements and prices.  And they aren’t over-burdened with huge layers of overhead!  They are also less likely to have hedged all of their production… so this gives them a big advantage when prices rebound.

Look for small mining companies with solid mines – IN PRODUCTION – and producing profits.

Buy the best gold stocks you can… and hold onto them long term.  You’ll be glad you did!

Good trading…

Brian Kent

Note:  Brian Kent has been trading the markets for more than two decades and now writes and edits for PennyStockResearch.com.  You can sign up for the penny stock research newsletter a trusted source for the truth about penny stocks! Sign up today and get a free research report – http://pennystockresearch.com/free-reports/.

 

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Category: Trading Penny Stocks

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Brian Kent is the Editor for PennyStockResearch.com. He also pens Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market's next Blue Chips.

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