How to Avoid the Sure Path to Losses and Disappointment

What proportion of investors make a profit over long-term trading in the markets?

You’d think 50%, right? It’s a coin toss. Prices go up, down, and sideways.

Search online and the results such as here and here will tell you anything between 10% and 30%.

Diving into the markets without a plan or simply hoping to get rich quick will likely lead to deep losses and disappointment.

Why is that?

An ordinary investor likes to chase winners.

And who wouldn’t?

Something is rising quickly, and you don’t want to miss out!

Plus, the crowd can’t be wrong, right?

The problem is that many buy after the price has taken off or they let momentum confirm that this is the trade to make them rich. There isn’t a clear exit plan because they aren’t familiar with what they bought.

What if I tell you that despite these odds, it’s possible to increase your chance of being a winner?

While it’s not guaranteed, it’s a tried and tested way.

Let me share something with you…

Winning by minimising error

Most of you have heard about gold as an asset. It’s a boring asset. Many even call it a ‘barbarous relic’, ‘a pet rock’, and an asset that yields nothing.

Now, I’ve made a case that there’s merit in gold doing just that. Because it keeps track of the mistakes of the financial system, past, present, and future.

And I’m not the only one who says this. There’s the founder of The Agora, Bill Bonner, who likes gold because it’s a reliable asset that is just there. It doesn’t change.

He explains as much in my interview with him for ‘The Gold Investor Series 2022’.

This is one way to increase your chances of being a winner in the markets — avoiding making mistakes!

Or you could take additional risks, but a calculated one.

This one isn’t for everybody, though.

And if you want a quick profit and little effort, I ask you to stop reading right here.

The veteran’s winning strategy

Many investors dive into mining stocks with the hope of making a massive return. And they go for the tiny companies as well — the penny stocks. The smaller, the better.

Others do a random sweep of 10 or 20 names hoping to see two or three take off like a rocket — the Pareto analysis of the 80/20 rule.

But this is like going to the roulette table and putting your chips across several numbers, hoping it pays off.

I don’t doubt that some of you have enjoyed success doing it this way. It has its merits.

The mining investment legends that I follow have a better way.

Take Peter Schiff and Don Durrett, for example.

Both have decades of experience in investing in gold mining companies. Their successes are largely in the producers. That’s the bread and butter of most mining investment veterans.

And that’s why I wanted them to also be a part of ‘The Gold Investor Series’, to give those who are interested an opportunity to hear a first-hand account of a tried-and-true gold investing strategy.

Producers have confirmed deposits, established plants, and are generating revenue. These companies have worked hard to either find a deposit or raise funds to build or purchase one. A well-run producer will generate a profit during lean times and significant gains in good times. This allows them to grow bigger through expansion or exploration.

I started my foray into investing in gold through buying shares in gold producers too. It was in mid-2013 when the gold bear market turned savage, lasting until the end of 2014. The journey was rough, and I could’ve given up on many occasions.

Listening to the veterans helped me stay the course and it paid off.

When people threw in the towel, I bought more and increased my holdings across several gold producers. Some of them were solid companies but the squeeze of a high price of crude oil relative to gold meant many were marginally profitable. Therefore, the shares of these producers were trading at multiyear lows.

What was an insane strategy turned out to be paying cents to buy dollars. It didn’t feel like it at the time.

In hindsight, I’m glad I had the advice of those who experienced this before to keep me on the path. You can see below what happened to my portfolio in the first 18 months:

Of course, I’m writing to you now because things turned out well after all:

An opportunity presenting itself now

Gold is a cyclical asset. It waxes and wanes depending on how investors are willing to fall for the story that the central bankers and governments will keep a stable economic system.

The public is like a naïve love fool believing the philanderer one more time after getting caught with their pants down.

And that’s why holding gold is a good idea. It’s like at least if the cheat walks out on you, the ring is yours.

Gold stocks, on the other hand, could prove to be an even better play on the failure of the financial system.

This time around, with two years of gold trying to break out of a narrow range, it might propel gold stocks to deliver exceptional gains.

The recent sell-off in gold stocks seems to have taken the wind out of even the most faithful investors. This is especially the case with the speculative explorers and developers.

Don Durrett believes that the success rates with investing in explorers and developers is around 10% and 20%, respectively. But the rewards can be exceptional.

Some of these stocks have started to attract the attention of speculators in recent weeks. Several of these companies have topped up their cash balance to ensure they can weather any storms ahead.

You don’t want to miss out on the opportunity to grab these companies. Who knows what returns they can deliver to you…

In fact, I have one such company in mind that I’m recommending to those who attend today’s keynote event of ‘The Gold Investor Series 2022’.

You’ll get all the details, including the ticker symbol and buy-up-to price, simply by watching here.

God bless,

Brian Chu,
Editor, The Daily Reckoning Australia