The price of gold leapt to a record peak above 1,070 US dollars per ounce on Wednesday. Most part of the increase was backed by a decrease in the US dollar against the European single currency. The euro surged above 1.49 US dollars for the first time since August 2008.
This post isn’t about gold, nor is it about currency fluctuations, more so, it’s about timing in the market.
I’ve always subscribed to the theory that if everybody is talking about something it’s time to get out.
Each morning I watch Bloomberg News and I read the business headlines of various papers. Without fail I’ll come across a bundle of advertisements (kind of hard to miss in this day and age), and what do I see? More and more frequently I’m coming across advertisements discussing the merits of buying gold. There are also more and more gold and silver scams out there than ever before.
But isn’t buying gold old news? I strongly believe that news articles, particularly printed in magazines, are distributing old news. Think if it this way, for a monthly magazine, you receive it after it has been mailed, printed, edited, written, sourced and brainstormed within the magazines monthly meeting. The article you are reading could be more than two months old before you read it. Don’t think that you have stumbled across something that no-body else knows about, because it’s likely that that same writer, who wrote the article for the magazine, also writes for a newspaper or a blog. Magazine news is old news.
I remember back in 2000, prior to the internet bubble bursting, I was riding a train at peak-hour on my way into Sydney’s Central Business District. On that trip I overheard a number of conversations where people were talking about how much money they had just made in some new tech start-up. Others were discussing what stock they were going to buy next. Several months later the market came to a crashing halt. I’m certain that those people on the train discussing internet stocks had yet to receive their monthly shareholders magazine telling them it’s time to sell.
Yes, there are big gains to make at the top of the cycle, but that’s because it’s a very risky play.
Back to gold prices; I’m seining advertisements on TV, the radio, newspaper, and various magazines telling people to buy gold. To me, that is time to get out of gold and into something that isn’t being splashed across numerous advertising mediums. Gold may not have peaked yet, but it surely has a clear view of the horizon.
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