Contrarian Investing

The investment approach we all know but few practice is as relevant today as it has ever been.  We posted an excellent article by Adam Hamilton yesterday which highlights exactly this.  The temptation now is to buy into US shares as Australia looks to be entering a period of hardship (whilst with an All Ords still nowhere near pre GFC highs) and the US, if you believe the hype, is taking off with new records being hit in various market indices and everything is awesome.  Yesterday BIS (Bank for International Settlements) released a report that shows Australian house prices are the second highest in world.  At a time when gold and silver are close to new lows one could feel despondent and like you’re ‘missing out’ by not having all your wealth in shares and property.  Here’s some sage words you should remind yourself of.

Warren Buffett

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”

John Templeton

"To buy when others are despondently selling and to sell when others are euphorically buying takes the greatest courage, but provides the greatest profit."

Baron Rothschild

"The time to buy is when there's blood in the streets."

Gold and silver are at low prices due to poor sentiment, they are negatively correlated to the very assets that are peaking.  As stated above, gold and silver as a contrarian, portfolio balancing purchase has rarely made more sense than now.