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This Chart From The 70s Gold Bull Market Will Shock People
Today 40 year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, put together a fascinating look at the gold bull market of the 1970s and contrasted that with what investors should look for in this bull market. Below is Fitzwilson’s piece.
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
August 1, 2012
“‘A Watched Pot Does Not Boil.’ When it comes to investing, the old adage is equally applicable. An oft-quoted theme is that mining stocks will advance many times over the underlying price of the metals when ‘the’ moment arrives. Using history as our guide, let us look at Newmont Mining.
The chart below will surprise a lot of peope. It shows the price of Newmont Mining from 1963 through the end of the bull market move in gold in late 1981.
As you can see, there was a massive move to the upside at the end of the cycle of almost 500% from October of 1977 until September of 1981. Along the way, however, there were many times to celebrate as well as many moments when hope dimmed and some cashed out. During the period we saw the following moves:
It was August of 1971 when Nixon closed the gold convertibility window. On August 15, 1971, Newmont closed at $21.75. On November 5, 1971, Newmont closed at $15.13, a decline of almost 30%. Counter-intuitive? Yes, but reality, nonetheless. For those expecting a linear progression upward in the price, they were sorely disappointed. Many probably sold their positions as diminishing hopes ate away at the strength of their conviction....
Continue reading the Robert Fitzwilson piece below...
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From 1969 to 1974, we saw a virtual ceiling on the price of Newmont followed by a severe decline ending in March of 1978. No doubt that there were far fewer stalwarts holding onto their positions after going through that brutal correction.
For those who were not scared out of the bull market, but rather held on because of their convictions, they were now in for the ride of their life. Newmont bottomed at $10.13 in early 1978 and rose virtually straight up for almost 4 years before the price peaked.
Going forward we will see massive moves to the upside in the metals and the mining stocks. It is extremely important that KWN readers globally have the proper knowledge and conviction so they are not shaken out of their positions. As we can see in the chart above, it is impossible to know the exact timing of the explosion in price. The reality is these are chaotic times and anything can light a fire under these markets at any given moment.
What is important to remember is that you are attempting to preserve and enhance your capital and your future. Many investors overcomplicate things and fall into the trap of second guessing the course they have set. Investors simply need to take their positions in real assets, and trust their convictions. They also need to exercise patience.
Remember, in the end we are all spectators watching this great tragedy unfold. The key here is to protect yourselves and your family by properly positioning your portfolio.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
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Eric King
