Investment Contrarians

Gold Bullion

Gold bullion is pure, physical gold that can be bought or sold as an investment. Gold bullion is 99.9% pure gold. Back in 2002, the editors of Profit Confidential started telling their readers it was time to jump into gold-related investments. This gold investing guidance and analysis proved to be extremely timely. Yes, back in 2002, we started offering gold analysis to our readers and we still do it today.


Avoid Regret: Accumulate Gold Bullion Now

By for Investment Contrarians | Dec 3, 2013

Gold Bullion NowThere are many ways to try to get a handle on where the market is currently trading and what’s likely to come. For me, investor sentiment is extremely important, but not for the reasons many would think.

All markets have various factors pushing them. As a contrarian investor, you want to look at taking profits during periods when investor sentiment has become extremely bullish, and accumulate positions as investor sentiment gets too pessimistic.

Why are these turning points?

If everyone is bullish, then there is little new money left to pile into an investment. Conversely, when everyone is bearish and has sold their holdings, there’s very little selling pressure left, which creates a floor—at least over the short term.

Ultimately, the fundamentals of the market will come through, but the gyrations and oscillations are driven by investor sentiment.

Take gold bullion, for example. I recently read a very interesting article stating that currently, 18 out of 31 Wall Street analysts expect gold bullion to fall this week, continuing their negative investor sentiment outlook on the precious metal. As of the end of October, hedge funds held the lowest level of long positions in gold bullion since July 9. (Source: “Gold Bears Persist as Prices Near Year’s Low on Fed,” Bloomberg, November 29, 2013.)

Both the short-term prediction by analysts and the long-term forecast by hedge funds are expecting gold bullion to remain weak. It’s interesting to note that we are now getting a convergence in investor sentiment over a variety of timeframes. It’s also interesting that July was the last time investor sentiment was this low.

So what happened to … Read More


2014: The Year for Gold Bullion Investors?

By for Investment Contrarians | Nov 20, 2013

Gold Bullion InvestorsLast week’s testimony by Janet Yellen, President Obama’s choice for the next head of the Federal Reserve, was quite interesting. What I also found fascinating was the reaction in various markets.

Yellen was testifying in front of the Senate Banking Committee, and when asked about the possible formation of bubbles as a result of the Federal Reserve’s quantitative easing program, she stated point-blank, “By and large, I would say that I don’t see evidence at this point in major sectors of asset price misalignments.” (Source: Bloomberg, November 15, 2013.)

I certainly don’t have any experience working at the Federal Reserve, but I find this hard to believe.

Is the new Federal Reserve chairwoman trying to convince us that with a weak economy, it makes perfect sense for the stock market to be at all-time highs, margin debt to be soaring to record levels, the housing market to be experiencing bidding wars in certain areas of the country, and for vehicle sales to be soaring—all while incomes remain flat?

What do these factors tell me? All of these different sectors of assets are being fueled by cheap money produced from quantitative easing by the Federal Reserve.

Look at it this way: how many sectors of the economy are booming where there is no financing available, but cash purchases only? Very few. We keep hearing about retailers that cater to the average American having difficulty, since their consumers lack the cash to increase their spending. People are only buying goods if they can get credit, using cheap money.

Is this a bubble?

Well, I ask you to consider this: if the Federal … Read More


Why the Sell-Off in Gold Bullion Is Based on Faulty Logic

By for Investment Contrarians | Nov 15, 2013

Gold Bullion Is Based on Faulty LogicOver the last few days, gold bullion in U.S. dollars has been under selling pressure yet again. With the price of gold bullion pulling back, one obvious question arises: what’s the appropriate investment strategy at this point?

Many are pointing to talk that the Federal Reserve is about to reduce its monetary stimulus, and this has led some investors to adjust their investment strategy by reducing their gold bullion holdings.

There are several interesting points to make about the argument for this investment strategy. Firstly, members of the Federal Reserve, along with other central bankers around the world, have explicitly stated that inflation is far too low—the opposite of what these investors who are bearish on gold believe.

Considering that the Federal Reserve has all the control in terms of money supply and it is adamant in its goal of increasing inflation, I certainly wouldn’t want to fight the Fed.

So, the media is stating that the reason people are shifting their investment strategy on gold bullion is because the Federal Reserve is about to begin reducing money printing due to the increase in inflation…

Since when does higher inflation lead to lower gold bullion prices? It just doesn’t. If inflation gets out of control, I would rather already own gold bullion than join the crowd scrambling to jump on board again.

If anything, having the Federal Reserve and global central bankers pushing their foot on the money printing accelerator just means a greater increase in the probability of inflation.

Inflation, of course, means higher asset prices. As an investment strategy, when an economy is encountering inflation, the one place … Read More


How Growing Chinese Credit Signals Long-Term Opportunity in Gold

By for Investment Contrarians | Nov 11, 2013

Chinese Credit SignalsI think it’s interesting how people, including the mainstream media, discuss an issue without truly understanding what it really means. It seems that skimming the surface is good enough these days, as no one seems to want to dig a little deeper.

One example is the recent reports from Chinese Premier Li Keqiang, who stated that the Chinese economy must grow at least 7.2% per year in order to limit the unemployment rate at four percent. (Source: “China Premier warns against loose money policies,” Reuters, November 5, 2013.)

As we all know, the Chinese economy is extremely important. As the second-largest nation in the global economy, its ability to manage the Chinese economy and prevent it from weakening further is quite important.

China’s Premier warned against creating even easier monetary conditions within the Chinese economy, as additional money printing could lead to even higher levels of inflation. Currently, the total credit supply is now in excess of $16.4 trillion (or 100 trillion yuan), approximately twice the size of its entire Chinese economy.

With the global economy still quite weak, China has had trouble exporting. It is now trying to transition the Chinese economy from export-led to domestically oriented, reducing its reliance on the global economy.

At least, that’s the story on the surface…

Here’s what troubles me: the Chinese economy is slowing, we all know that, yet all of its money printing so far has led to a total amount of credit supply twice the size of its entire economy.

So, what has all of this money printing really done?

It’s caused people in the Chinese economy to react by … Read More


Update: Global Gold Bullion Demand Still Rising, Supplies Running Dry

By for Investment Contrarians | Oct 21, 2013

Global Gold Bullion DemandIt is amazing how different investor sentiment can be around the globe regarding just one topic: gold bullion.

Most of you are quite aware that the price for gold bullion here in America has dropped significantly this year. One could come to the conclusion that investor sentiment has left the precious metal for good.

However, looking at investor sentiment for gold bullion on an international basis, the picture is very different.

Just recently, the premium for gold bullion in India hit a record $100.00 an ounce above London prices. The demand for gold is so high in India that the supply for physical gold is running out. (Source: “Gold Premiums Hit Record in India,” Reuters, October 15, 2013.)

As most of you are probably aware, the Indian government has tried to clamp down on imports of gold bullion to try and stem the outflow of their currency, which is causing the rupee to drop significantly.

This is a great example of not just investor sentiment on a local level, but of global investor sentiment as well, which gives us a better picture of the true fundamental situation. Gold bullion has fallen in price here in America; that’s because investor sentiment looking at the precious metal from the point of view of the U.S. dollar.

People in other nations are not experiencing the same type of price drop in gold bullion. In fact, in India, the rupee has dropped so far that gold prices are still near their record highs.

Will investor sentiment shift in favor of gold bullion once again versus the U.S. dollar?

Obviously, no one can predict the … Read More