Gold Edges Higher

Posted: Dec 06, 2012 12:01 AM

Bargain hunters stepped in to buy gold after what started as a dismal week for gold and commodities in general. 

Gold was higher early Wednesday by $9.02 to $1,704.19 and silver was up $0.19 to $33.04, boosting the silver/gold ratio to 51.6. 

The rise in industrial commodity prices was pretty much across the board with platinum, palladium, copper and crude oil all posting gains.  Wednesday’s gain came in spite of stronger dollar, a clear indication the commodities market was oversold. 

Hopefully some of you managed to lock in prices on a small buy when price dipped under $1,700, although where we are today is still not bad for an entry point.  On the kind of time horizon you should be holding gold, even $100 - $150 an ounce difference is not that significant. 

Even if you bought gold at $1,800 back in March, the lowest price we’ve seen since then was just under $1,550 and even today, after all the selling this week, we’re still back inside $100 an ounce relative to the 52 week high.  Nobody likes to lose money but by making small, regular buys over a long period of time it all averages out.  You may be behind on the small buy you made in March of this year, but you’re up nearly $200 an ounce on the small buy in January. Prices in June, July and August averaged out higher prices in September, October and early November.  

It’s good to keep a small amount of cash handy when you see sudden dips in prices, particularly if those dips also take down other commodities and run counter to moves in the currency market, but the smart course is to maintain a disciplined approach and stick to it. 

On any given day in the internet media I can find articles saying gold prices are going to collapse and other articles predicting gold is on the verge of a huge run up which illustrate the two media appeals you see most often: Fear and greed.  Both of those strategies try to capitalize on the fact that the average person doesn’t have the time to spend all day analyzing investments. 

By having a plan to make small, regular buys and keeping your gold and silver at a relatively fixed percentage of your wealth, you can avoid the mistakes most common to retail investors. 

Chris Poindexter, Senior Writer, National Gold Group, Inc