Tags: Skarica | gold | buying | opportunity

David Skarica: Gold’s Plunge Provides Buying Opportunity

By    |   Monday, 15 April 2013 05:56 PM

Gold’s 14 percent drop over the last six days gives investors a chance to buy the metal and gold stocks at attractive prices, says David Skarica, founder of GoldStockAdviserPro.com and a member of the Newsmax Financial Brain Trust Alliance.

“You’re OK with the bullion because it’s getting to the point where it’s cheap, but I prefer the stocks,” he tells Newsmax TV. “When you’re talking about 11-year lows, that’s when you want to buy.”

Gold stocks plummeted 70 percent during the 2008 financial crisis, and then they jumped more than 400 percent to their 2011 tops, Skarica says.

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Editor's Note: A full, unedited version of this interview is available exclusively to Financial Braintrust Alliance subscribers. Visit www.fbtalliance.com for more information and to sign up.

“They’re down 60-plus percent from the top, so they have more leverage,” he states. “On the downside they can fall faster, and they have more leverage on the upside.”

Gold is going through its biggest drop since the bull market began in 2000, Skarica says. The spot price stood at $1,361 an ounce Monday afternoon, down 29 percent from its record high of $1,921 in September 2011.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

“Fundamentally we have a very cheap market right now,” Skarica says.

He looks at the ratio of gold’s price divided by gold stock prices. That ratio “is actually the cheapest since 2002, when gold stocks were starting their big bull run,” he says. “That just tells you how cheap these stocks are.”

Investors’ use of exchange-traded funds (ETFs) has pushed market volatility higher in recent days, Skarica says. The biggest gold ETF, SPDR Gold Shares (Ticker: GLD) has $57.2 billion of assets.

ETFs make it easier for investors to liquidate their gold positions. “In the past you’d go to a pawn shop or wherever to sell your gold, where now you can just press a button, sell GLD or whatever you own,” Skarica says. “So definitely it has added to volatility.”

The use of ETFs helped gold stocks lag behind the metal during gold’s bull run, Skarica says. “In the past if you really wanted leverage in the gold market, you would buy the equities.” But with the advent of ETFs, investors ignored gold stocks and just bought the ETFs.

“Even though you would think that increased access to information and trading would increase the interest in gold stocks, it actually decreased, because people could so easily get out of the metal itself” in the ETFs, Skarica says.

Still, there’s a bullish signal amid the ETF selling, Skarica says. “It’s all paper [ETFs],” he states. “If you look at the physical market -- people buying gold and silver coins or central banks in Asia buying precious metals -- that’s not slowing down, and it’s actually increasing.”

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

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Gold's 14 percent drop over the last six days gives investors a chance to buy the metal and gold stocks at attractive prices, says David Skarica, founder of GoldStockAdviserPro.com and a member of the Newsmax Financial Brain Trust Alliance.
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Monday, 15 April 2013 05:56 PM
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