There is simply too much emphasis placed on trying to time the top or a bottom of a given market. This is the most stupid endeavour ever and a waste of time. The entire premise is wrong, and hence, the result will be flawed. The emphasis should be on identifying the trend; once you know the trend the rest is history. Who cares if Gold bottoms tomorrow or not if you know the direction? Would it matter if you got in early or slightly late if you identified the long-term trend? The answer should be; no it does not matter at all.
This is why at the Tactical Investor our focus has always been to use Mass psychology and technical analysis to spot new trends, and that is what made us bail out of Gold in 2011 when all the experts were predicting that Gold would continue trending upwards.
Factors that bode well for Gold In the Long run
- There are many factors both positive and negative; we tend to focus on the trend as both positive factors and negative factors, in general, tend to be overblown. According to the naysayers, the financial markets should have experienced cataclysmic corrections several times over. One of the biggest bullish developments is the emergence of wealthy middle class in China which is now the world’s largest. China is also home to the most billionaires in the world. The Chinese have a strong affinity for gold, and as their wealth increases, they will deploy increasingly large sums of money into Gold. It’s not only China’s Middle Class that is growing; the whole of Asia has experienced a boom. Asia will be the epicentre of economic growth for many decades to come. Asians are savers in general and tend to all favour Gold, so this one development is a significant factor in favour of Gold in the long run.
- Central banks (China & Russia) are aggressively purchasing Gold, and this has to be construed as a long-term bullish signal.
- For those who seek negative factors we have a few; Student debt is at record levels, and delinquencies are rising. The subprime auto loan market has also exploded and so have the current delinquency rate is at a 20 year high. These are just two of many factors that could trigger another financial crisis.
The fundamental factors were incredibly bullish for Gold running into 2011 and after that, but Gold did not respond. What happened? Even though the money supply was being inflated at a mind-boggling rate, the velocity of money had slowed down. Money was not changing hands fast enough, in other words, the masses had no access to easy money. Hence, Gold tanked, as deflationary forces set in. These forces are still at play, and that is why we are neutral on Gold stocks but bullish on Gold and Silver bullion.
Things you should not do when it comes to Gold. Don’t listen to the Naysayers and Doctors of Doom.
One of the guys should listen to with a barrel of salt is Jim Sinclair, his prediction of 50,000 an ounce is insane, to put it mildly
Until Gold closes above 1350 on a monthly basis, all the rallies are likely to fail. We are waiting for the trend to turn positive on Gold. Sign up for our free newsletter to get the latest update on the Gold and other Financial markets.
New comments Oct 3, 2016
Gold has been unable to close above $1350 for too long and so the benchmark has now moved to $1365. Unless it can close above this level on a monthly basis, it is likely to test the $1000 ranges again when the dollar consolidation is over. Oil, as we stated early in Feb, was and probably still is a much better play, but at this stage, it is close to hitting its upside targets.
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