By Paul Airasian
Gold stocks suffered a full blown panic this past month. This was an exceedingly rare sell off (capitulation!) The entire Gold Mining sector is at a fundamentally absurd low price level.
Fear has won for now, everyone hates Gold stocks today. How many of you or your investor friends own any Gold Mining shares? This is an irrational emotion. Gold stocks have never been cheaper relative to the price of Gold as demonstrated by the venerable HUI/Gold Ratio (HUI is the Gold Mining Index).
This month’s panic and capitulation makes it the perfect time to be a contrarian (when fear takes over and there is blood in the streets, as the adage goes). When fear dominates, investors freeze, and are foolishly worrying about another twenty percent (20%) downside instead of preparing for the potentially 900% upside!
The Risk/Reward in the Gold Mining sector has never been better. Between November 2000 and September 2011, the Gold Mining Index (HUI) rocketed over 1600% higher, multiplying investors wealth by 18x while the S&P 500 lost 14%. Sentiment will recover and reverse in the Gold Mining sector, but the investor’s extreme, irrational fear and ignorance won’t wear off until they miss most of the soon to come explosive upside.
Contact me to learn how to prepare for this coming boom in the Precious Metals Sector.
Founder, Director. www.goldinstitute.net