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Why Gold Is Overpriced

RG2009

The price of Gold has not even been able to test the USD 988 level so far, this level was the one which triggered a major sell-off last year. I do really expect a try up to USD 988 within the next 2 months but also I still believe that the massive double top being identified in the chars will take the price down to the USD 800/700 level; some may consider it further consolidation of the 1 year-long trading range, which I would agree with, others will become bears, goldbugs will suffer a lot but in the end it will be the last run down prior to a strong 2 year long uptrend. We will be short-term buyers in June 2009, then strongly bearish from July to September 2009 and then will make every attempt to find a bottom between September 2009 and January 2010 for a 2 year bull run, provided that the price never goes below USD 500 before the end of the year. The bull run will take the price at least to USD 2.000 by 2011. Of course traders and scalpers will play the volalitibilty, long term goldbugs will make money but probably much less than they could have if they weren't that stubborn as far as not selling these days. The strategy through the end of the year is to buy short-term, take profit on a daily/weekly basis then sell short strong rallies, take profit on a fortnightly basis and buy it all at the USD 700/600 level for a continuation of the multiyear bull trend until sometime between 2011 and 2013. Sell following Gold fundamentals, as I believe you understand them very well, unless you don't care about 50% price swings then you are ok for next 3 years, as far as maintaining your purchasing power long-term. If you still want to hold your physical Gold, play paper Gold to hedge your investment and make good money. There is no point on having your vault full of coins/bars if you can't cash out and make a life out of it.


On Apr 01 08:08 AM RG2009 wrote:

> I'm definitely not impressed by this sort of analysis. Gold is nowhere
> near underpriced, and being bearish about it seems like outright
> nonsense to me. Then again, its just my opinion...and that of many
> other blogs and articles i've read...but then, we could be all wrong!
> What are the odds? Time will tell.

Has Gold's Downward Trend Ended?

Mark: I love your article, once again you showed a strong ability to put the market in prospective. I'm contibuting less to this blog than I used to because it became a controversial blog, rather than a sharing blog, just because bull don't like bears, Republicans and Democrats don't like each other, vote seekers score based on findind a place in the commentor's list rather than respecting contrarians perspective, some so called investors defend their strategies as if everyone else's view was foolish and in the very end everyone is just 50% right all the time. Only the market proves investors right as time goes on. You always go with the trend giving the market the benefit of the doubt and that is as fair as it gets. Fundamentally I believe (READ I BELIEVE) the real test will come at USD 988, under which a broad consolidation range could be expected to continue even longer than expected, it may not change until when fundamentals and/or technical patterns drive the price into a less volatile environment where panic is not the investment/trading strategy but a real belief that Gold is the right place to be, not because of wishful thinking imposed by physical Gold holders. I'm bullish long term, just to clarify, but I give bears a place to speak up and discuss their view as long as they are sensibly analyzed.

Gold Correction Necessary and Healthy

Got it, thanks!

On Mar 05 12:27 PM sakata wrote:

> I wasn't saying they were silly. On the contrary, if they make money
> in this economic climate they are wise. It was those who get all
> bent out of shape about it that I was saying should stay on the side
> lines. People who take a rational approach to whatever type of trading
> they prefer will be fine. It is just that I get tired of people who,
> on the one hand, seem to propound short term trading but, on the
> other, talking about a secular bull market in gold.

Gold Correction Necessary and Healthy

Sakata, your comment is totally valid and your long term view on Gold (not sure about Silver) coincides with my view, but it does not mean that everyone else is silly. There are long term investments, short/medium term investments and the good speculative returns (very good by the way) as you mentioned in your comment. All of them are smart investments as long as you preserve your capital, keep its value but also make money to spend out of it, I mean being able to cash out from time to time and still have the physical stuff as you call it.


On Mar 05 08:17 AM sakata wrote:

> People who get bend out of shape over the price of gold should not
> be investing in it. They have a trader's mentality which is not suited
> to precious metals. Unless you are trading in paper gold, which is
> not really gold in the first place, you are dealing with a relatively
> illiquid commodity and which is not going to get you reliably short
> term returns (it does offer some good specualtive returns, but not
> for the physical stuff). Gold, and silver even more so, are long
> term investments. A ten percent change in either direction over the
> short term is not a cause for excitement or despair. Come back in
> three years and let's

Gold Correction Necessary and Healthy

Right in the spot again Mark!!!

The Rebirth of Gold and Silver?

Tradestraff you are bloodily right. I believe this kind of analysis should be put in an appropriate time frame. Being Bullish or Bearish is more an attitude than a real trading strategy, if the bullish case was the case long term then it will take months of consolidation to work itself out of the range. I won't be surprised to see barely moving between 650 and 750 which can still be profitable but it just that a short/medium term strategy. If you are reading this article you probably don't have 100 million bucks to move the market yourself, so follow the trend, sell now booked profits on December and Gold Bullish in January 2009 risking the profit made in your short selling and then you can rest no matter what happens to the price of Gold.