A great article by Tim Iacono, a founder of the investment website ‘Iacono Research‘, providing market commentary and investment advisory services specializing in natural resources, was published recently in Seeking Alpha in regards to Gold.
Those who bought their GLD shares last fall are selling at steep losses.
This appears to be a classic case of not understanding what you own as most institutional investors and money managers who bought GLD late last year probably never really liked the idea of buying gold and, now, they just want out.
Presumably, many bought GLD on the recommendation of investment banks such as Goldman Sachs who, last fall, were predicting further gains for the yellow metal as the next round of Fed money printing got underway.
That didn’t work out the way investment banks thought it would.
So, here we are, a full week after the gold price plunged to almost $1,320 an ounce in panic selling and GLD investors continue to sell gold, many of them believing that they’re lucky to be able to get out now, at slightly higher prices than last week’s lows, making their realized losses a little less painful.
This is a classic example of how markets work and why an investor should stay calm and do not panic. Remember, if you pick a good stock, a good company, which pays dividends, has a solid dividend history, growth, makes money, you do not have to be worry about the attitude in the market. In case of Gold, this drop was a classic panic selling bringing a great opportunity to buy.
I also looked at the Fear & Greed chart (see below). Interestingly, the market mood was moving towards fear, but the S&P 500 doesn’t correspond to the market sentiment at all. Are we really seeing an exhaustion in the market? A potential lack of buyers? Who knows. This can also indicate that the market participants are just taking a break before more buying hits the market. The future will see, where we are heading.
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