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The Shining Asset Class – Gold

Published on February 17, 2009

The Shining Asset Class – Gold

February 17, 2009

Recall the post on Dec 31 on watching the Gold action. It has been closing upwards every years for the past 8 years. As of Friday’s close, Gold was up almost +7% year to date and as of this writing, it’s rising further.

Attached chart shows a massive base building around $920-$940. And if Gold is to break-out based on 3 box reversal, the next logical price point is $1060, almost to earlier peak registered in 2008. That would mark either the double top, or if upside momentum is sustained, a new beginning on next Bull Run.

Based on my understanding of the bull markets and bubble formation, Gold hasn’t yet reached into the mad rush, the speculative zone. It may seem possible that sustained move past $1060 will begin that bull run phase leading to speculative zone. OP readers and OPNewsletter subscribers know that I have been a gold proponent for long time. No matter what others think, I think gold is the real symbol of wealth for generations and been passed in that “psychology” from one civilization to the next.

Dow has been turning lower and lower when compare with gold. 1 share of Dow buys 8.4 shares of Gold vs. 21 almost year back (this is rough approximation). Many can explain this downtrend via various rationale, but ultimately if coordinated efforts from the world bankers will show somewhere that’s in Gold. There are multiple interpretation of rise in gold including as vague as it is indicating that economy is improving and inflation is on horizon, to “safest heaven”. I am in the 2nd camp for now. I shall warn you though; Gold is not for the weakest heart. It can really stir one’s emotion and throw one out of the game. We played GLD in Aug’08 OPN portfolio and this monster ruined that month for OPNewsletter and resulted into the ONLY loss making month for OPN. However, as part of my personal diversification GOLD is an important asset class and I have NEVER sold any physical gold.

In any case, I thought to bring this to your attention. Check out your nearby gold vendors, Physical gold coins may be almost out of the market and do you know that Physical Gold is now commanding almost 15-20% premium over paper gold, Yes!!

The Shining Asset Class, Gold.

Profitable trading, OP

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