Now, again, we had that smash in April and gold went down over 20 percent between April and June. Well, right there at the end of June, the Chinese were buyers, so my advice to investors: don’t use leverage. Buy physical bullion. Don’t buy paper gold. Do what the Chinese do, which is buy the dips, put it away and don’t read the papers.
So gold’s volatile. You just have to get used to it. And if gold is down a lot, it’s because deflation has the upper hand.
But nothing moves in isolation. If gold traders down to, let’s say, $800 an ounce, that is a highly deflationary world. That probably means the stock market’s crashing, other commodities are going down, so you might actually like your gold better in that environment, because even though it went down a nominal space, it can outperform these other asset classes and still preserve wealth.
Of course, in the opposite case, if inflation takes off, we all know what’s going to happen: gold is going to go way up.
- Jim Rickards via Future Money Trends: