Daily chart of the World Gold Index for Dec 14th, 2011. Down $72 and change in today's trading to $1591.
The wedge pattern was pierced to the downside and has gone through the 200 dma. As mentioned in yesterdays post, when Gold has touched the 200 dma over the past 10 years, it has been a buy. It went below the 200 dma in the 2008 financial crises where all investors sold off just about everything they held onto. Many needed to liquidate due to margin calls. Will the European debt issue cause the same effect?
I personally believe that some large players (banks) want to exchange their fiat into Gold. (Especially when there is so much of the stuff sloshing around in the system due to TARP and QE2) If you are going to purchase a large amount of Gold, do you want to purchase it at $1850 or at $1550 and ounce?
They can start a sell off and cause others to liquidate their positions which will drive the price lower. They can then be able to purchase Gold at lower prices. So here is your chance to exchange paper/cotton fiat for a real asset.
There may be another day or two of lower prices, but it may be a sharp drop lower to a spike back up. It is difficult to time the market as most people are working during the day and cannot head down to the local coin dealer. (Buying ETF's or mining shares is much easier these days with a simple click of a mouse button). Stay long and do not worry, in 6 months, Gold may make new all time highs.
Pretty insightful post. Never thought that it was this simple after all. I had spent a good deal of my time looking for someone to explain this subject clearly and you’re the only one that ever did that. Kudos to you! Keep it up.I hate to harp on this, but I continue to see some exhaustion on the charts and additional downside moves ahead of us, especially if the S&P 500 April low of 1,294 is not reached.
ReplyDeleteWith the traditionally slower summer months ahead, I expect that trading will be flat from the already lackluster interest in stocks. My investment advice would be to be extra cautious.Gold Buying
Yes, I agree that speculators need to be very cautious in these markets. I think the fed reserve and government needs to keep the market propped up to the November election. If the market crashes, Obama doesn't stand a chance at getting re-elected. He needs to keep a cap on OIL too, try to keep the gas price under $4 a gallon.
ReplyDeleteI'm looking for a rally in Gold/Silver in the 1st quarter of 2012. Sell in May and go away until Labor day... =)
BTW, you have a nice site at Profitconfidential.
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