Time to update my strategy on gold

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In recent months, I’ve recommended investors take up gold at certain levels. Gold has risen 9% in under four months to be at around $1,773, however, I don’t think this run is going to continue in the short term and below I have refined the strategy.

In my previous notes on gold on 3 September and 14 of June 2012, I recommended investors enter gold at these three points:

  1. 20% of your allocation at $1,616
  2. 30% at $1,574
  3. 30% at $1,688

If followed, you would have been 80% filled in your gold allocation at an average price of $1,627.

For me, this is enough and I recommend locking in profits right now. For the purposes of this report, one could close out all positions (I declare that I have).

I expect Gold to come off now before resuming its upwards climb. Following a pull-back, you could look to re-enter gold at these support levels:

  1. $1,708 buy back 30% of your allocation
  2. $1,678 buy back another 30% if it gets there
  3. $1,655, buy another 30% if it gets there

Gold $1,773 – Retracement in the Wind. Ultimate Target still $2,085, 17.6% Higher!

What I like about the chart?

1) The 200-day moving average is pointing up.

2) The chart is on track for a long-term target of $2,085.

3) This looks like and feels like the run-up we had from September 2009, and then April 2010. In each case, multiple upside targets were set, and all reached and exceeded.

4) Retracements to $1,708 (3.8% lower), $1,678 (5.7% lower) or even $1,655 (7.1% lower) to the 200-day moving average (yellow line) are possible without doing damage to the upside target.

5) A solid base has been confirmed as created now since my article of 14 June 2012 and then 3 September 2012. A solid bottom has been established from 16 May to 30 August.

6) As in my last article, gold has broken out of resistance of $1,660.

7) Last time I wrote, “Other indicators starting to show we are on the cusp of a new uptrend.” Now I confirm, the uptrend has begun, it is preferable, but not absolutely necessary to see a nice retracement now to consolidate that uptrend.

8) Target 1, of $1,808 has been discarded as not necessary before retracement, now looking for higher T1 at $1,851, the first yellow line on the right of the chart.

9) Target 2, of $1,901 has not been altered.

10) Target 3, of $1,974 has been newly projected.

11) My ultimate target of $2,085 has also not been altered.

What I don’t like or what worries me?

1) Nothing.

Please note that my views are not for the long term. My method results in views expressed that relate to an outlook that lasts weeks or at most months. For example, my view on Shanghai’s Index has for now been met and completed since 22 March 2012, 11 days later. Currently regards Shanghai, I am in a cautionary observant position. Your utilisation of this information needs to take into account the time frame I set. The stocks recommended as “Steady as She Goes” may be held for the longer term, which for me means months.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should consider the appropriateness of the information in regards to their circumstances.

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