I have owned gold and gold stocks for a while (too long in fact holding through the great bear of 2011 to 2015). Hopefully I am a smarter investor during this upcoming cycle and will actually take profits (same with crypto). These types of markets are not for buy and hold investors. You need to buy low and sell high when sentiment peaks. Then if conditions remain favorable when sentiment hits extreme pessimism then it will be time to buy again and repeat the profit cycle.

The bull cycle can last anywhere from 5 to 10 years and you have not missed this cycles rally yet.

The first recent example of a gold stock bull began in 2002. Gold price rallied over 250% and peaked in 2008 during the Great Financial Recession. However since gold equities are able to increase earnings faster than the rise in gold prices (assuming the business is disciplined and keep costs stable), the share price for gold stocks in general increased over 400%.

For most investors it makes sense to gain exposure of a basket of securities such as GDX - VanEck Vectors Gold Miners Etf. Investors who can pick and choose the best producing gold miners can earn higher returns by taking the extra risk.

The second recent example began in 2009. Gold prices recovered quickly after the financial crises help by global central banks unleashing a tidal wave of liquidity through multiple Quantitative Easing and other program initiatives. This was a much shorter period of time peaking in 2011 with gold prices rising over 80%. Once again gold stocks vastly outperformed the gold price rising close to 180%.

Gold remains a strong asset class with such low interest rates globally (even an increase in entities paying a negative interest rate), supportive global central banks and a potential for more investors to look for the safety of gold relative to bubble like conditions in other assets classes.

Rising inflation expectations could create a gold price mania and gold stocks are a most own to take advantage of a rising gold price environment.

Buy gold stocks today for potential triple digit returns but be prepared to sell once sentiment is high and everyone wants to own gold stocks again as history is likely to repeat.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.

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