With gold prices dropping over the last few months, the market and its henchmen in the mainstream media seem to be trying to convince you that now is the time to sell your gold.
There’s nothing nefarious about this coincidence. It just happens that the market tends to send the wrong signals to investors at the wrong times, while the mainstream media just happens to be the loudest amplifier for these wrong signals.
To distract your natural decision-making center from following market signals and amplifiers, I suggest that you surround yourself with as much data as possible.
One big data point to pay attention to is the size and duration of major corrections.
During this bull market in gold (starting roughly in 2001), we’ve seen 3 major, sustained corrections.
We’ve also had many more small corrections – of 10% or less during that same period – but I’ll focus on the big corrections, because these seem to have the biggest psychological impact.
These corrections are normal and to be expected for any bull market. And they shouldn’t change your outlook on the long term story for gold.
It also helps to look at historical corrections during previous bull markets.
Take a look at some of the biggest corrections in the last bull market for gold, between 1971 and 1980:
Remember these corrections – and put them in context with the correction we’re living through today. These corrections, in retrospect were all great times to add to your gold position.
So if you’re making any transactions during this current correction, I hope it’s a buying decision, not a selling decision.