When do I Buy Gold?

I have been covering gold ever since Oct 2007 and many readers know that I am a long term bull on Gold (both Physical metal as well as paper gold). Gold is one of those underlyings that I don’t short. I, at times, may initiate a swings bearish positions but I will usually close it within a few days. Key reason – there are many factors beyond my tracking ability that affect gold price movement including but not limited to geo-political, currency, flight to risk etc to name a few.

I, however, have certain points when I usually go long. Pls look at the chart below-

This is a 3 year daily chart of Gold prices. Though gold has been trending upwards for the last 10 years, recently gold has picked up speed. I have plotted 50days Simple Moving Average (SMA) and 144days Exponential Moving Averages (EMA) on this chart. If you look carefully, you will observe that every time Gold pulled back around 144days EMA, it has nicely bounced and a up leg started (For swing trading I use different methodologies). And this “support point” is the point where I start to refine my entry.

This post is NOT to say that gold is headed to 1,600 (144 days EMA as of this writing) but to mention that IF gold drops to 1600 I would surely add more positions to my existing long positions.

Disclaimer- As of this writing, I have some bearishly biased option positions in GLD. However, a certain % of my investments are in both paper/physical gold.






3 responses to “When do I Buy Gold?”

  1. Rich Avatar

    Nice post. You were right, gold just touched $1600, now it is going up a bit again.

    About paper, why do you have paper instead of physical? I would like to hear your point of view.


  2. OptionPundit Avatar

    Rich, I like paper because of “options” and I could create income from gold without really forecasting a direction.

  3. […] hope you benefited from Gold’s rise from the key support levels I mentioned in the FREE post here. Even though markets are tumbling, for OP Income Newsletter, we are nicely up for the October month […]

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