Is it a good time to buy gold?

Sunday, January 17th, 2010

Copyright (c) 2010 Seven Days Ahead

Market Update 14th January 2010

Gold sold off after making an all time high in December 2009, and earlier this week, it looked set for a fresh rally, but the market has slipped. What lies behind this price action?

The Technical Trader's view:

WEEKLY CHART

The underlying bullishness of the market is derived from the massive H&S reversal that suggests a minimum move up as far as 1313.

The first impediment was the Fib cluster at 1221-1232.

But the pull back found support exactly where you might expect - the first Prior High at 1072.60.

Look closer. DAILY CHART

The market bounced off that support from the Prior High, and when the resulting surge faltered, not well how the Prior High at 1114.50 was support again - ratcheting the market better.

There's no clear reversal in place yet, but the market appears supported for further bull trending in both the short and the medium-term.

The Macro Trader's view:

Gold is a market that has enjoyed a clear underlying Bullish trend since early 2004. Along the way there have been several corrections lower, some of them relatively steep, but the market has on each occasion shaken off its malaise and resumed its bull trend.

More recently, Gold has tested the lows after making an all time high in December 2009. And earlier this week, it looked set for a fresh rally, but the market has slipped, what lies behind this price action and should bulls be concerned of something more profound emerging?

The rally in Gold has been driven mainly, but not entirely, by the weakness of the Dollar. So it is no coincidence that Gold began its correction at the same time as the Dollar began its own recent correction after a stronger than expected US Non-Farm Payroll report at the beginning of December 2009.

However, the strength implied by that December payroll report hasn't uniformly followed through in subsequent data releases. Once again, this has led to questions being asked about the strength of the US recovery which has resulted in the Dollar giving back some of its gains.

But the recent strength of Gold wasn't just due to the Dollar's price action. As the New Year began traders became more concerned about the level of government debt in many of the developed economies, but especially in the US.

With the current US administration set on a path of almost never-ending debt accumulation, the credit rating of the US has been subjected to scrutiny as never before. The build up of debt, especially in the US, worries investors because they fear the US could be building up a problem it might struggle with in subsequent years. They think the financing of that debt could and probably will drive up long term yields, stifle recovery, hinder productivity and unleash inflation.

All of these fears are reasons to go long of Gold. But just as this market looked set to rally further, the gains were given back. Once again weaker US data was to blame, causing a deeper sense of angst about the recovery.

However, even if it is right to begin fretting about the strength of recovery (and we currently do not hold that view) the long-term outlook for Gold remains Bullish. If ,as we expect, the recovery gradually builds, traders will focus squarely on the budget deficit and debt, which will undermine the Dollar and support Gold.

If, on the other hand, the recovery falters or turns out to be much more anaemic than current expectations, then the outlook for the deficit and debt looks even worse as policy makers would be tempted to pump prime with yet another unaffordable fiscal stimulus.

In such a circumstance we believe the US would be in line for a sovereign debt down grade, the Chinese et al would voice their concerns about the Dollar's long term value even louder and Gold would make new highs.

Timing as ever is the key. For now we think this correction has a little further to play out. But don't be fooled into thinking this is a bear move: it isn't.


Mark Sturdy, John Lewis & Philip Allwright, write exclusively for Seven Days Ahead.com a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our products and subscriptions at http://www.sevendaysahead.com

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Is Gold A Good Investment During A Recession?

Thursday, October 22nd, 2009

Is Gold A Good Investment Option During Recession

There is a huge demand for gold worldwide and gold prices are seeing a correction. Gold as an investment option is being considered by most stock experts and analysts. The recession has seen a slump in the stock markets, companies are under financial crises, banks have declared bankruptcy, so the investor is quite scared of his hard earned savings and is considering gold as a safe and sound investment. Gold acts as a good hedge against inflation, it can give you instant cash and even if the economy is bad you will still have reason to smile, as you will have gold which will not lose its shine quite fast.

When people invest, they either have a long term goal playing on in their mind or a short term period where they will get sufficient returns. You can use gold as a short term or a long term investment. Research and analysis suggests that gold has grown by at least 2% in the last 50 years and the present decade has seen the gold market grow at 4% annually. The gold market has seen fluctuations and in the year December 2005 itself it was sold at roughly $500 per ounce.

But at present gold is being traded at about $900 per ounce and that is definitely a great increase compared to the year 2005. if you have gold right now then you stand to gain if you sell off at this very moment and you can nearly double your cash. People are wondering if it is the right time to buy this yellow metal, but you never know. Gold prices could hit rock bottom and you may end up a loser. But it is surely the right time to sell off of you are holding gold stocks and options.

This precious yellow metal has never shone so bright. But it is certainly not a short term option, because gold has seen to fluctuate quite a bit and you may burn your hands in this process. Gold prices may climb up but that is not sure because the market is quite volatile. It is better to stay away from gold in this recession time. you can invest a little of your investments in gold to diversify your portfolio but it certainly is not a good option to put all your hard earned earnings into gold.

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Beware “Cash For Gold” Companies

Monday, August 17th, 2009

With gold prices at all-time highs, there has been a massive proliferation of "cash for gold" companies both online and offline. Before you sell your gold, make sure you do your research beforehand. Know who you are doing business, and what to look for throughout the process.

You've heard the saying "if it sounds too good to be true it probably is?" Well, the statement is dead-on when it comes to trusting goldbuying companies that promise to give you the best value for your gold.

With gold prices at record-setting highs, there have been a proliferation of companies throughout the company telling consumers that now is the best time to cash in their gold. But how much do you know about these companies, and how can you be sure they will treat you right?

Tricks gold vendors use to cheat you out of your money include failing to show actual gold payout amounts on their sites so that they can then pay you whatever they like once you have already mailed in your gold, charging hidden fees such as shipping costs or gold appraisal fees, and not insuring your package, just to name a few.

A quick browse through the internet will show a host of gold buying vendors advertising "highest payout for gold," so which ones do you believe? The key is to essentially ignore these "highest payout" claims and look at the actual numbers themselves. If the site does not post their payout prominently, you know something is wrong. But even more than that, the posting should list the clear, actual payouts for each piece according to weight and gold content. In other words, a company may post a payout for a 14K ring, but fail to post the payout for an 18K ring, and then in the fine-print state that the payout will be less if the jewelry does not weight a certain amount. Most consumers will only discover this after they have already mailed in their gold, and then the goldbuyer can charge them a shipping fee if they want their jewelry returned!

Another trick buyers will use to cheat you out of your money is to tack on hidden fees either in shipping or processing your gold. The price of these should either be part of the gold transaction or should be clearly illustrated as an additional fee. This should not be something that is subtracted from your payout once you think that you know what amount you will be compensated for you gold items. Most reputable gold vendors will offer you free shipping, guarantee your package for more than its worth, and make sure that the final price you think you are getting you're your gold is the actual price that you get. That's the way business should be.

Regardless of whether you are being charged for insuring your gold package or not, you should make sure that the gold buying vendor is insuring your package as it is shipped. Otherwise you, as a gold seller have no protection for you pieces and no guarantee on what or where your items end up. More often than one could imagine companies take advantage of their customers and may claim to not receive packages or only receive partial packages; insurance takes care of this and gives you the peace of mind to enable you to follow through on your gold transaction.

Along these same lines, and to ensure your protection as you sell your gold pieces, the gold vendor should be able to guarantee the entire gold transaction. Should you not receive the price that you were guaranteed or thought that you were receiving for the sale of your gold you should be able to return and or cancel the payout in exchange for all of your gold pieces. This means that you are fully protected throughout the entire process.

Finding out what a gold vendor is offering and making sure that they are taking care of you as a gold seller should be very easy to determine. Payouts, company policies, guarantees, and insurances should be prominently posted on their website along with step-by-step instructions on how to sell gold. You should also be able to talk with a live representative if you have any questions on the process. If the company you are thinking of dealing with has any of these key elements missing, move on! There are simply too many gold buyers out there with too many dirty tricks up their sleeves not to do your homework properly and be 100% sure you are going with a company you can trust.

Sam Rivers has been in the gold and jewelry industry for over 30 years! A frequent writer on consumer advocacy within the gold for cash industry, Mr. Rivers assists gold sellers with advice and tips on how to get top dollar and sell gold.Article Source:http://www.articlesbase.com/finance-articles/beware-cash-for-gold-companies-1133483.html

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