Gold : To make the most from falls in order to buy

It is normal that in its bull market, we see gold fall. One still has to know how to identify and analyse these movements: do they mean the end of a bullish cycle or are they brief? Currently, and probably for some years to come, the bull market is set to continue. The falls in the price of the ounce are completely normal; they can be justified by the context: for example the summer is a slack period for investors, jewellers and industry. Or by events such as, for example, when informed investors resell their gold to cover their losses on shares following a crash.

When it drops, we say that gold corrects itself, which is a normal trend within a bull market which has lasted for more than 10 years. Let us remind ourselves that in 2008, during the full crisis of the sub-primes, there was a rush towards the dollar at the cost of gold which had fallen by 20%. Such falls are unusual if gold has not reached what analysts consider its “critical” peak price.

There is little agreement between analysts as to when this has been attained.
When gold shoots up (by recording for example a rise of 50% between September 2009 and June 2010), it always pauses before resuming its rise. These micro-falls are themselves foreseeable, according to certain technical trend indicators, such as the MACD (Moving Average Convergence Divergence).

To make the most from falls in order to buy

Initially, one should not give in and panic by reselling gold at any price.

Secondly, it is necessary to benefit from these brief movements to buy gold at a low price, either with a view to an insurance investment, or for a profitable investment.

For example, when gold reached a new record on September 6th, 2011, it underwent a fall of 16% within the following 30 days; one talks about consolidation, even of correction before resuming its rise. As long as gold has not reached the symbolic threshold of $2,000, one should buy, in particular gold coins, such as the Sovereign gold coin, the premium on which dropped suddenly.

Extract from the English adaptation of the French book : L’or, Un Placement qui (R)Assure (2011) written by Jean-François Faure,President and founder of AuCoffre.com.

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Gold : To make the most from falls in order to buy was first posted on March 14, 2014 at 2:38 pm.
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