Gold Bulls and Bears

Author: Ian Davis - Bullion Manager

Published: 2 Aug 2019

Last Updated: 16 Oct 2019

With gold prices reaching record levels the bulls and bears of the market will react differently. We usually see heightened buying activity followed by a large influx of selling especially if prices remain high for a few days. Which are you and will you buy or sell?

Bullish Gold Investors

The Bulls - we have a chance to catch up with these customers when prices keep increasing as those optimistic that the trend will continue pile into the market. When prices break previous resistance levels commentators often claim a run is on the cards and as we have seen the 6-year, 8-year and now the all-time resistance prices broken all within the course of a few weeks so the recent prophecies could well be bearing fruit. Any google search will reveal a plethora of YouTube videos, soundbites and twitter feeds proclaiming there is no end to the rise but be warned markets operate in cycles and no one rings the bell when prices take a downwards turn. Buying in rates from bullion dealers will often come down as companies like ourselves mitigate the risks of a market swing so you may find it difficult to sell your new purchases quickly for a good price. If prices continue to climb this becomes somewhat irrelevant! 

Bearish Gold Investors

we see these customers when there is a lull in prices, and they buy when prices are low believing an upward trend will ensue in the coming months or even years. Buying in the lull of 2015 would have been a great choice as now your investment would have swollen by 45-50% its intrinsic value. There is a famous saying accredited to Baron Rothschild who made a fortune in the aftermath of the Napoleonic War who claimed the "the time to buy is when there's blood in the streets". Therefore waiting for the gold market to issue a correction could make you a lot of money! The flip side here is that the bears could be left in the dust if gold continues its inexorable price rise. For example, in the early 2000's, the bears may have held off when prices reached £300 per ounce claiming imminent correction, only to miss out on a meteoric rise to £1178 in 2011, and now upwards of £1194 today. 

So To Buy Or To Sell?

No one has a crystal ball so be cautious of prophecies and hype. Often investors keep gold as a percentage of a wider investment portfolio, and I would echo this as a sensible decision. Holding a lot of Sterling appears risky with Brexit looming and if like us you believe in the yellow metal a regular consistent purchase helps hedge risk of price fluctuations in the future. Gold is generally a long-term investment and here at Chards we treat it as such so we would always recommend buying. With prices this high its entirely your decision how much you wish to commit, and we recommend you carry out your own market analysis to reach a conclusion. If your thinking of selling this depends on your situation and personally if you have been considering this anyway, then now might not be a bad time. On the other hand if you have not considered selling why not hold on for the ride and see where the market takes us! 

Further Reading

You may be interested in exploring more articles in our precious metal and coin news section of the website.

Our gold investment guides can be found here.

A selection of our gold products for sale can be found here.

This guide and its content is copyright of Chard (1964) Ltd - © Chard (1964) Ltd 2020. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited.

We are not financial advisers and we would always recommend that you consult with one prior to making any investment decision.

You can read more about copyright or our advice disclaimer on these links.