What a lucky soul you are in that you found that article that someone had so conveniently posted on that business and financial news web site, you know the one that quoted this great advice by Mr. Trader/Dealer/Broker (aka Mr. Trader) on this investment (in this case Gold). You know the web site I am talking about the one with all the advertisements for Brokerage House, Mutual Funds, Investment News letters, that are just one click away. How fortunate you are, and you do not even realize it.
What possible reason would a Gold Trader/Dealer/Broker (aka Mr. Trader) advise you (aka Mr. Little) to buy Gold on the Dip? Is Mr. Trader just an all around nice guy trying to help the “little guy” out? Could be that Mr. Trader is trying to make the world a better place? (We maybe just for himself) Is he your brother? (Nope) Is he your cousin? (Probably not) Is he your cousin’s cousin? (Might be) Is he your friend? (Do you still believe in the Easter Bunny?).
Or could it be he has a large unrealized net gain in his Gold position, and he would like you to help him to convert to a realized net gain? (On a scale of 1 to 10, this rates as an 11).
Could it be that his commission income not quite where they need to be for his yearend bonus? (On a scale of 1 to 10 it is about a 9).
Could it be that he has a big customer (much bigger than you) (aka Mr. Big) that has a large unrealized net gain in their Gold position who has decided to take their capital gain now while the tax rate is favorable? And it just so happens that he will realize a nice healthy commission from Mr. Big (He might have even given Mr. Big a discount in order to keep the Golden Goose, no such luck for you my little friend you must pay full fare) and a commission from you Mr. Little (How lucky you are to be allowed into the tent). (On a scale of 1 to 10, this is somewhere between 10 and 11).
Gold is up some 560 percent sine 2001, is it realistic to think that it will continue at this blister pace for the foreseeable future? (Just my only humble opinion, but on a scale of 1 to 10, I rate it a 1). Remember that guy Newton? Well he formulate this little theorem called Reversion to the Mean, or Regression to the Mean, just a fancy way of saying that physical systems like to be lukewarm or Momma Bear porridge (Not too hot and not too cold). It appears that gold has been on a tear since 2001, what is in the cards that would or could lead someone to assume/construe/conjecture that it will continue like it has in the future? (I do not know and I would suspect that a great many do not know, so maybe it is a good time to get out of Dodge, to find a greater fool to buy this tulip bulb, or an island with untold riches in the south seas).
Ok so now that you have your antenna up, your asking your self (Self, what is in it for this guy (me)?). There is something in it for me, but probably what you might expect.This post is but one in a series of post that I have generated for my children. I have a vested interest in their future success (genetically that is, my limited immortality). I know that my time like all of our time is limited on this planet (God gave us only so much and he does not care to share with us the amount that he has allocated to us, he has his reasons). These posts are an attempt to codify some of the things that I learned the hard way and some of the wisdom that was given to me by my parents, grandparents and great grandparents, in an attempt to keep my children from making my and their mistakes. I have paid for each of my mistakes with the most precious commodity that I have (no it is not money) it is time. So take it for what it is worth to you no more no less, after all these are only the words of an old man.