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Gold Soars Today
Posted on | July 12, 2011 | Comments Off
Why do we care about gold? We’re a dividend investing site. Well the long explanation can be read here, but I will recap the basic thesis. I believe that stocks are overvalued with regards to gold. I don’t know whether or not they are overvalued with regards to the dollar, because the dollar could just continue to lose ground and boost nominal stock prices.
We believe that it makes sense to hold a significant chunk of gold and precious metals because of the macro economic environment. The macro economic environment is one with major debt crises on the horizon, possible political and social unrest and an environment where the leaders of the world’s powerful countries print money to solve problems. This is all very bullish for precious metals.
While the aim of this site is finding dividend stocks and building large portfolios of cash flowing stocks, a major focus of ours is to be patient and wait for the best buying opportunities because we have discussed at length that when you buy matters. Your long term return is significantly impacted by your purchase price. Now, we believe that stocks will be significantly cheaper when priced in gold in the future.
I’m a gold bull, but I’m not a perma-bull. There will be a time to sell gold, and that time will likely also mean it’s time to buy stocks. High quality dividend stocks. This is the foundation of my investment thesis today. Own gold and undervalued dividend paying companies. When the gold bull run comes to a climax, sell gold and roll the profits into undervalued dividend paying companies.
Today as gold heads into the high $1500 range and towards the $1600 level, it is a reminder that this bull run is alive and well.
I own GTU, CEF and gold mining ETFs like GDX.