After a few weeks of consistent gains, gold took a 4.3% nosedive this past Wednesday. This may have some wondering if it’s a good time to sell, or is it a good time to buy?
According to TV personality and co-founder of TheStreet.com Jim Cramer, investors should be buying and holding gold and not trading it. In the quick interview below, Cramer says short-term precious metal prices are being driven more by technical matters rather than supply and demand.
Over the long term though, prices for gold and silver are being dictated by supply and demand.
However, since there’s only been a 1% increase in gold discoveries, increasing demand here in the U.S. and around the world are certain to put upward pressure on gold prices.
Considering the instability of the financial system in Europe, the fact central banks are printing cash to capitalize banks as well as geopolitical concerns in the Middle East, don’t expect the gold rally to end any time soon Cramer says.
He also makes the interesting point about the term “liquidity.” If you hear central banks and governments using this word, you should immediately go out and buy some gold.
Cramer says if you sell, you’ll likely be missing out on better returns down the road. He advises investors only sell holdings when gold is at a peak like it was last summer when it neared $2000/ounce.
However, he says gold prices aren’t quite there yet so he’s holding onto his bullion.
The price dips is when you want to buy.
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