May 18th, 2013
Sean Brodrick: The gold market has been on the devil’s own rollercoaster recently. Up … down … aiii!
Don’t worry — in fact, for a trader, those big swings mean opportunity. That’s because you can make money in gold no matter whether it is trending up or down.
Wild swings in the price of gold don’t mean the bull market
is over. Far from it.
is over. Far from it.
From 1975 to 1978, the pullback was much-deeper than the current pullback we’ve seen, and then prices went higher again.
Let me show you a chart of gold’s recent action compared to what it did back in the 1970s …
The blue line represents how gold traded during the 1970s. The gold line shows how gold has performed between Sept. 6, 2011, and this past Friday.
Notice a pattern here?
Click on the image to view it full-size
As you can see from the chart above, the action in gold looks familiar, doesn’t it? It’s possible that gold’s history could repeat itself … and stair-step higher the next few years just like it did almost 40 years ago.
With charts, it’s easy to look at what has happened in gold, silver or any other asset to see where it’s been. But what’s in store (and when) is always subject to interpretation.
That’s why you hear a lot of different opinions on how gold is set to trade in the short term. That’s also why several of you have written in recently, asking to see gold charts through my eyes.
And so today I’d like to give you a couple of things I’m looking at, from a short-term technical basis (i.e., the chart view) and also from a longer-term fundamental view.
First, Some Chart Action
The old saying goes that “every sunken ship has a chart” — in other words, charts sometimes don’t work. However, it’s clear that gold has been in a bull market since 2002. And the pullback in April just brought it to one line of support.
Gold has also been in a sideways consolidation since 2011, as you can see here …
Again, you can see that gold came down to test support. That support makes it easier for gold to bounce from that level.
There’s nothing that says gold MUST bounce. It’s just easier for it to do.
But what could help to drive it higher?
Looking Beyond the Charts
I like to start with the chart view because it provides both a historical as well as a forward-looking picture. But what determines the shape of the coming trading action are forces beyond our control, but ones we can anticipate and figure out how much of an impact they will have.
There are plenty of reasons to be bullish or bearish about gold right now, and I can make the argument either way. It’s up to you to take the information available and make the best decision for yourself.
And from where I sit, I see a healthy marketplace that’s alive and kicking with more gold coming to market and even-more people wanting to get their hands on it.
Billionaire investors have been dumping their gold holdings by the truckload, giving rise to a surge of buyers ranging from mom-and-pop investors to Chinese housewives who were happy to go bargain-shopping for gold to wear, to gift, to keep and, as my friend Tony Sagami mentioned the other day, as haywire insurance.
We’ll only know the bottom when we see it in the rearview mirror. But there are plenty of reasons for optimism.
Here’s one that goes a little bit deeper than buying and selling bars, coins, bracelets and rings vs. ETFs and stocks that are leveraged to gold prices’ every move … what, to many, makes gold a truly priceless possession.
bars, coins, bracelets and rings vs. ETFs and stocks that are leveraged to gold prices’ every move … what, to many, makes gold a truly priceless possession.
Gold’s Greatest Appeal
There are eternal values — freedom and the right to pursue your own vision of life, liberty and the pursuit of happiness among them.
Real freedom can’t be falsified or denied; neither can gold.
Gold can’t be destroyed by fire, flood or plague. It CAN survive the complete collapse of a financial system.
I’m not saying that’s what’s going to happen; I’m saying gold has a well-earned reputation as the ultimate safe harbor.
Gold will never go to zero. If you want to play it safe, own gold.
Gold has enjoyed a great run over the past few years, but it hasn’t been a straight path. There have been enough dips and outright plunges to make gold traders feel like they’re riding the devil’s own roller coaster.
Speaking of roller coasters, they provide us with an incredible opportunity to jump on and hop off at just the right times. And one strategy has worked time and time again …
Buy the Dips
It takes courage to buy when everyone else is selling. In fact, it can feel downright crazy. But if you do your research, you can act with confidence that even if gold dips lower than you’re buying it, the upside potential is HUGE.
I’ll tell you what I think — I believe this slump in the metals is running counter to big forces at work beneath the surface. In fact, I’d say that this slump is a golden opportunity, and right now I’m showing my Junior Resource Millionaire subscribers how to get positioned for gains in several off-the-radar gold stocks.
Bottom line: There are forces in place that could easily drive gold much higher over the next few years. Select gold stocks and funds that are leveraged to the price of gold could do very well indeed. And gold futures — the purest play in the precious metals market — could catapult higher.
To be sure, it’s not a cakewalk. There are pitfalls along the way — careless investors could get burned. And there are some investments I wouldn’t touch with someone else’s 10-foot pole.
But for the best investments in gold, silver and other precious metals, be sure to check out my 2013′s Gold Stock Jackpot video today. And be sure to follow the brief instructions at the end to find out how you can join my Junior Resource Millionaire service at a steeply discounted price. Hurry — my publisher is taking this video offline tomorrow night — click here to ensure you don’t miss out!
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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