The gold market has been a disaster over the past few years. When you consider what has happened in the gold market this year alone, gold has reversed about 20%. That after being relatively flat and down for about two years. Tough numbers for sure.
Is it time for a reversal?
We just wanted to give our members a clearer picture as to what is going on. It is so easy to become so wrapped up with the emotional roller coaster of what has happened that you are caught not pulling the trigger on something that is now truly undervalued. It’s so much easier to purchase something while it’s going up and to sell when it’s falling. Of course the potential of the downward pressure to continue will be an ongoing threat, but the chances of seeing it go down from here is much less of a risk than getting in when it was $1,900 per ounce. It’s elementary common sense. After watching the real estate market get cut in half through 2008 and 2009, it was much easier to take a chance on purchasing properties since 2009 because values have come down so much off of their highs. Purchasing something after it drops isn’t always sound financial strategy, but after something such as gold has retraced as much as it did, opportunities like we are seeing now are starting to present themselves.
Check out this chart, it has some interesting technicals that we wanted to point out and explain.
As you can see, a double bottom has formed. That large volume spike a month ago is a capitulation low. This is when everyone was getting out. The second bottom is value buyers getting in on the low. We also have a MACD crossover, and we are well below the 50-day moving average. Reversal to the mean would suggest we have 15% short-term upside at this point.
We are looking for gold to go back to around $1,490 at this point.
And there are several reasons beyond the technicals to speculate that gold will go up from here…
- The Chinese and Indians have been buying record amounts of gold (though there was a slowdown this week)
- There is the onslaught of future inflation due to central bank printing and the global destruction of currencies.
According to MSN Money:
“The four largest central banks are abusing their currencies as fast as they can, with Japan going for broke with the “cheap money will save us” meanwhile the European Central Bank cut rates earlier this month for the first time since the middle of 2012.
And in just the past month, smaller central banks have begun joining in with gusto. Australia cut rates to record lows. Denmark cut rates. India cut. Turkey cut. South Korea cut. Israel cut. Kenya, Belarus, Poland, Georgia and Sri Lanka also cut.”