Grab This Gold Bull by the Horns

You may wish to mark today's date on your calendar. When you look back on the tragic deterioration of the U.S. dollar and its role as a global reserve currency, this will stand out as a pivotal moment.

Gold exploded through an 18-month corrective trading range Tuesday, officially terminating an epic test of wills for seasoned precious-metal investors. They stood by their analyses of the fundamental landscape for the dollar, even as pundits clamored to declare an end to this nine-year bull market for gold and silver. Surpassing $1,040 per ounce, gold replaced the previous highest price of $1,033 set back in March 2008.

Shares of the popular SPDR Gold Shares (NYSE: GLD  ) exchange-traded fund reached a fresh 52-week high in early trading. Agnico-Eagle Mines (NYSE: AEM  ) , meanwhile, remains $13 below its March 2008 highs above $83 per share, and I recently pointed out the sizeable disconnect between the price of Yamana Gold (NYSE: AUY  ) shares and their respective historical prices.

I understand that many investors have approached gold and silver with extreme caution, and that some have awaited confirmation of the bullish trend with a breakout like the one now under way. As I have done since 2006, I encourage Fools to grab this gold and silver bull by the horns. But do so methodically, selectively, and with the expectation of increasing volatility as the bull market progresses.

At this watershed moment in the precious metals bull market, I recommend that Fools continue to focus on the fundamental macroeconomic drivers behind this technical breakout. I documented a series of meaningful developments in Asia that helped to propel the early stages of this surge last month, and now I turn your attention to the Middle East.

The Independent reports secret meetings between key Gulf Arab states and China, Russia, Japan, and France about ceasing the trade of oil in U.S. dollars in favor of a multicurrency basket. If true, that would be a major development in the deterioration of the greenback's strength and viability as a means of trade. However, a top official from the Organization of Petroleum Exporting Countries denied this revelation, calling it "just speculations" and saying that OPEC is "not in any sort of discussion over pricing of oil." True or not, we still remain in the mother of all currency crises.

My readers know that I anticipate a gold price of at least $2,000 before this bull stops bucking, and the dollar's unfortunate outlook continues to support this position. Beyond those noted above, I continue to highlight equities like Goldcorp (NYSE: GG  ) and Royal Gold (Nasdaq: RGLD  ) as solid long-term prospects. Within the silver realm, where I maintain the slingshot effect will yield still-greater price appreciation, Silver Wheaton (NYSE: SLW  ) and Coeur d'Alene Mines (NYSE: CDE  ) are noteworthy contenders.

Whichever vehicle you ultimately choose, know that this bull will not be a smooth ride, and try not to get bucked off by corrections along the way.

Christopher's silverminer portfolio at Motley Fool CAPS was sitting just outside the top 200 on Tuesday with this latest surge. With 92% of his picks outperforming the S&P 500, Fools may wish to mine his picks as a starting point for further research. CAPS is free and fun.

Fool contributor Christopher Barker carries a silver coin that reads "Honest value never fails." He can be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines, Coeur d'Alene Mines, Royal Gold, Silver Wheaton, and Yamana Gold. The Motley Fool has a gilded disclosure policy.


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4/17/2014 4:01 PM
AEM $28.39 Up +0.51 +1.83%
Agnico-Eagle Mines… CAPS Rating: ***
AUY $7.96 Down -0.06 -0.75%
Yamana Gold, Inc.… CAPS Rating: ***
GG $23.60 Down -0.21 -0.88%
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GLD $124.75 Down -0.79 -0.63%
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SLW $21.87 Down -0.22 -1.00%
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