GLD: Get out while you can!

5/1/2013

I told you on Friday to sell gold. In fact, my partner, who called the biggest breakdown in the history of gold, told you that the rally back toward 1500 over the past two weeks, gave you a “second chance … a gift, to sell it now!”

Let me repeat: My partner CALLED the crash in gold – ON THIS BLOG (read it here). And he told you on Friday that this bounce was a gift to sell it for the next leg down.

I hope you did. And if you own the gold ETF (GLD), please take my advice: Get out while you can!

Given the extent of disasters and blow-ups we’ve seen in the past five years, even if I did like gold, I wouldn’t want to be holding the gold ETF, wondering if it can withstand a collapse in spot gold and all that comes with it (margin calls, forced liquidations, etc.). So, again, here’s my ultimate warning: Get out while you can.

My partner’s note here on April 26th addresses the fundamental flaws with the gold trade very succinctly. From a performance standpoint, it’s down more than 11% year-to-date and is down more than 13% in the last six months. This may not sound terrible to some, but in comparison to the stock market its devastating, and its the reason you will never be able to retire.

Here’s why …

People who are invested in stocks are up 14% over the last 6 months — up 13% this year alone. If you have followed Wall Street’s guidance, you have bought gold and are likely well underweight stocks. What they don’t tell you is, there is a bigger cost associated with holding gold, other than just the losses you are enduring. It’s called opportunity cost. In short, the money you have in gold is money you could have in stocks. With that, your not just losing 13% in the last six months on your gold investment. Your losing 13% plus the 14% S&P return that your missing. That’s 27% in six months. All just to have an inflation “hedge?” Boy, your expecting a lot of inflation.

Think about it, gold does not pay dividend and its long term annual return over the last 50 years is less than 2%. That’s less than a CD or savings account.

But, listen, I am here to save you again. We’ve told you to get out of gold if your long. And I wanted to help you make you some money. Gold and silver have given us beautiful setups to buy downside options.

However, the horse is out of the barn. The options I was looking at late yesterday afternoon, to share with you in this blog, have already doubled – up more than 100%.

If you want to make money, stick with me. Our advisory service, The Billionaires Portfolio only buys stocks that can go up 2x, 3x … even 10x or more. And we only buy stocks owned by powerful billionaire investors. Why? They impose their will on the companies they buy. They control their own destiny. They control outcomes. We go along for the ride. And I’ve just added a new feature. From time to time, I will be using options to juice the portfolio for bigger gains.

You can sign up here.

Will Meade

Editor of the Billionaires Portfolio