Gold Mining Companies are Down 50% this Year with No Bottom in Sight
According to a recent article on MarketWatch, “Many major gold companies have lost at least half their value this yearafter a more than 25% plunge in gold prices, but analysts aren’t convinced that miners have hit bottom — and tax-loss selling may further the declines."
If you own gold, you hopefully bought insurance (put options) to protect your values when the price of gold goes down. And now, it’s down 25% this year alone, and down over 1/3 from its high of $1,900 per ounce. If you bought insurance, all you lost was the cost of the insurance.
If, on the other hand you didn’t buy insurance, and you find yourself in the unenviable position of owning gold (or silver), there is still time to protect yourself. Of course, I do understand the mentality of owning gold is one where you believe it represents a good hedge against future inflation due to the fed printing so much money, and it will more than likely go up in the future.
I do not know what the future will bring. If you do choose to invest significant sums in something as volatile as gold (and silver), it would be wise to protect yourself against downside risk.
In the late 1970’s / early 1980’s, we saw gold prices go up dramatically, and then crash. It took 20 years for investors to make up for those losses, if they ever did. Then the early 2000’s we saw a greater degree of increases to gold prices, and now it’s going back down again. So, I will ask the question to you once more, do you think history has a way of repeating itself?