Some people will go to the gold buying party too late. At that point, the profits will be gone.(MVIP photo).
Here are the phases of gold buying.
Phase 1- Undervalued - gold is undervalued. The smart investors buy at this time when gold is undervalued.
Phase 2- Rapidly rising value- people begin to realize that gold is the way to go. This is when more investors go into it. The mania starts
Phase 3- Overvalued- Everybody get's into gold. The price of gold sky rockets. This is when the smart investors sell their gold before the gold price goes on a cliff and gets undervalued once again.
Right now we are in the beginning of phase 2. China, India, Philippines, South Korea, Japan, Brazil, and many other countries are increasing their gold holdings. They know that trouble is brewing. Their citizens instinctually feel that now is the time to buy gold. The smart investors got in years ago. Some countries have woken up and realized that it is still not too late to get into the party.
However, other countries will join the party too late. Everyone will eventually get into it, but at some point the fun will end in a heartbeat. I suspect that when you see large swaths of citizens and central banks from countries like France, Spain, Portugal, Italy, England, and especially the United States join the gold party, that will be the time to get out. At that point everyone is in the game. When that happens the price of gold will sky rocket seemingly overnight. The smart investors will leave for another party before that happens.
Source: http://neilski.typepad.com/chicago_gold_and_silver_i/2012/11/3-phases-of-gold-purchases.html
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