Three Types of Gold Investors
We tend to speak with three types of investors. The first group has loved gold for a long time. They have owned it for years. This is a small but passionate group that warned about runaway government spending well before it became fashionable. They feel vindicated. They are not surprised.
The second group is newer to gold. They are not gold bugs. They simply recognize that the world has changed. Debt levels are extreme. Geopolitics matter again. Currency credibility can no longer be taken for granted. Gold now makes sense to them.
The third group is the most difficult. These investors avoided gold for most of their careers. They believe gold is dead money. They would rather invest almost anywhere else. This group remains uncomfortable. And it is large. We will come back to them.
Then It Happened
After reaching new highs, gold prices pulled back sharply. Crocodile tears followed.
This is usually the moment when investors lose perspective.
Now is the time to look backward for context. This commentary is meant to serve as a roadmap for the gold bull market.
This Is Not the First Gold Bull Market
This is the third major gold bull market in modern times.
The first occurred in the 1970s. The second unfolded in the 2000s.
Those two bull markets delivered returns of roughly 500% and 600%, respectively.
The current bull market, which began in 2022, has already returned 200%.
History does not suggest this move is over, rather, still in progress.
Bull Markets Include Pullbacks
Bull markets do not move in straight lines. None of them do.
During the prior two gold bull markets, there were five corrections of 10% or more. Said more simply, when you make a lot of money quickly, you should expect to give some of it back.
The current gold bull market has already experienced two corrections of 10% or more.
The takeaway is straightforward: Gold is acting like gold in a gold bull market.
Gold Historical Drawdowns
