We’ve been spoiled this past year or so.
Gold and silver both soared higher than even the most bullish goldbugs could have predicted. And it gets very easy to become accustomed to a market that only ever seems to stretch higher…
But hopefully you’ve been taking heed from my warnings over the past couple of months. I made several calls in late December to late January that a correction was coming.
As I wrote on January 14th: “Silver is headed for a correction. I don’t know when. It could be a week or a month or 3 months. No one knows.”
As it turned out, it was another 2 weeks before silver peaked:
We’ve seen a couple of small retracements over the past 6 months, but it looks like we’re seeing the real deal now: an actual correction: a downward move of 10% or more that’s sustained.
As much as it stinks to look at a sea of red in your portfolio you need to truly grasp that corrections are necessary, good and very valuable if you have the patience.
It means we have real, obvious value to choose from.
It means even our best performing stocks can take a breather and allow our valuations to catch up.
Understand this fact: this correction is a good thing. We will benefit from it if we respond correctly.
Today, I want to give you some “peace pills” that should help you feel good about what we’re seeing right now. The ability to look out over the horizon – beyond the short-term pain – to the long-term trajectory, is key to prospering while everyone else is losing their nerve.
First off, if you’re feeling jittery about this kind of price action, it simply means you are not diversified enough. It means you have too many eggs in one basket.
You can diversify by selling positions that you’re overweight in, (ideally taking profits).
You too are allowed to take a breather during a bull market correction.
But there are no signs that this bull market is over. Far from it. I believe we haven’t even seen anything close to the biggest gains yet.
How do I know?
For one, you need to look at this amazing chart that plots 1970s inflation against inflation in our current bull run:
History doesn’t repeat, as they say, but it does tend to rhyme.
If you understand the US is in a monetary crisis which can only lead to inflation – then you can see how an expensive war in the Middle East only adds fuel to the fire.
Sure, soaring oil prices put a dent in gold. That’s true. But consider what happens after this conflict concludes and oil’s price normalizes…
Money floods back into gold.
We’re obviously not close to that point right now. That means we’re seeing world class mining stocks go on sale.
In fact, I’m preparing to add 4 more companies to my GP10X portfolio sometime in the next week.
I’m still doing my analysis and valuations on these companies, and I can’t reveal their names, but for one example, we’re able to buy one miner for 40% less than it sold as recently as late January.
Gold and silver prices are correcting, but the valuations are all based on $3,500 gold and $40 silver.
These kinds of corrections are when you need to be putting money to work. It’s easy to buy when a company is making new highs every day, but the least risky time to buy stocks is during a correction when everyone is heading for the exits…
We’re in that time right now. It may last a while, which means we can build positions over time. There’s no rush. Just keep your sense of direction here. The bull market is not over. We’re in the middle innings – when the largest fortunes are built.
We’re in this game for years, not days or weeks or months. Stick with it and you will be handsomely rewarded.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio