Gold investors can teach stock investors a key lesson: Strategist

Even as billions of dollars have fled mutual funds over the past year, gold and silver coins and ETFs alike have seen major inflows. And for Convergex's chief market strategist, Nick Colas, this points to a key difference between stock and precious metals investors.

"In the back half of last year when gold was really falling off a cliff and threatening to break $1,000, there was a lot of negative press, folks stepped in and bought physical coins from the U.S. Mint at levels we haven't seen since 2013," Colas observed Thursday on CNBC's "Trading Nation."

Since falling as low as $1,045 toward the end of 2016, gold has now crossed decisively above $1,300. Still, that is well below the $1,900-plus highs of mid-2011.

"The stock investor should take a lesson from the gold investor and really believe in the asset a little more strongly and buy when it's down, because that tends to be where you make money," Colas said.

Most gold investors, unlike most equity investors, "have a very strong belief in the asset, and they show it time and time again. When prices drop, they tend to buy more," Colas said. "They don't walk into a coin dealer and want to sell just because things are down; they buy more because they have the belief that over the long term, that asset's going to work for them."

As precious metals have skyrocketed to start the year, with gold rising 26 percent and silver surging 42 percent, $14.5 billion has flown into gold and silver ETFs, which is the most of any six-month period in history, according to Susquehanna's head of derivative strategy, Stacey Gilbert.

"If you think about the market where it is ... how expensive it is, how we need earnings growth," and the fact that many think the Fed is more likely to cut rates this year than to raise, "turning to gold seems like a logical solution — having it in your portfolio makes a lot of sense."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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