Few of us will ever know what it feels like to stand upon the Olympic podium, to be adorned in gold or silver as a mark of singular achievement for our country. It has to be a defining moment in the life of any competitor.
We may never stand among those decorated Olympians, but that doesn't mean we can't go for the gold.
Although gold and silver have already seen historic price increases over the course of this nine-year secular bull market for precious metals, I submit that the truly defining moments of this long-term trend have yet to transpire. When they do, I believe that investors will either find themselves standing on the podium of gold and silver gains, or watching from home and wondering why they did not join the race.
Economist Nouriel Roubini gave newcomers to gold a good scare last month when he confidently declared a top in gold, but 71% of nearly 5,000 Fools responding to a Motley Poll agreed that Jim Rogers' expectation for $2,000 gold is more attuned to a world in which major paper currencies are deeply impaired by ballooning sovereign debt and persistent exposure to toxic derivatives.
Putting their money where their mouths aren't
Even Rogers' Quantum Fund co-founder, George Soros, who confused and rattled investors when he called gold "the ultimate asset bubble" in Davos last month, was busily ramping up his gold exposure during the fourth quarter, increasing his hedge fund's stake in the SPDR Gold Trust (NYSE: GLD ) by 148% to 6.5 million shares.
More interesting still, despite the lip service paid to fears of a gold bubble by a central bank official in December, China's sovereign wealth fund gobbled up gold exposure. While pundits were busy issuing predictions of when and how China would purchase the remaining gold available for sale from the International Monetary Fund (IMF), the China Investment Corp. (CIC) quietly amassed gold holdings that include a $145 million stake in the GLD gold ETF, and smaller stakes in major miners like Gold Fields (NYSE: GFI ) and Freeport-McMoRan Copper & Gold (NYSE: FCX ) .
I have argued that China's broader, global resource grab was the most overlooked story of 2009, and encourage Fools to view these gold purchases within a context of related moves, like CIC's $1.5 billion investment in coal, copper, and zinc miner Teck Resources (NYSE: TCK ) .
Emerging legend John Paulson, who is placing his money where his mouth is, continued to increase his fund's stake in miner Kinross Gold (NYSE: KGC ) during the period. His fund also retained a massive stake of 31.5 million shares of the GLD at year's end.
No shame in silver
It might offer limited consolation to American speed-skater Apolo Ohno, but there is no shame in placing second. Silver investors are well-accustomed to their metal playing second fiddle to gold in terms of both notoriety and performance. Fools may recall my discussions of the slingshot effect, which provides for the likelihood of even greater moves by silver than gold on a percentage basis as this bull market matures.
You can't win unless you compete
With further accumulation of widespread investment demand for gold, underpinned by increasing clarity in the outlook for fiscal distress within the developed Western economies, I continue to view gold's prospects for reaching at least $2,000 per ounce as something of a foregone conclusion. I know many of you don't share this view, but I hope some of you will take this opportunity to reassess your opinions about precious metals ... in case this really is your last chance to buy cheap gold and silver.
I agree strongly with Marc Faber that downside risk is limited at this juncture, and perceive a likelihood that $1,000 will hold as the new long-term floor beneath the gold price. Although I telegraphed gold's last major breakout back in September 2009, and then urged near-term caution just as the metal reversed course once more, I claim no prescience over whether gold will move steadily higher from present levels or dive downward to retest that $1,000 mark.
I encourage Fools to focus more upon the long-term trend that's in place, rather than attempting to time such oscillations with consistency.
Meanwhile, the only call regarding precious metals that truly matters for investors, in my opinion, is the decision of whether to continue to stand on the sidelines of this intact secular trend, or to compete for a chance to experience the kind of defining moment for investors that select Olympians might well understand.
Take the Motley Poll below, then scroll down to the comment box to elaborate.