Saturday, August 25, 2012

Gold is ready for an upsurge: Get your hands on the yellow metals before it gets too late
By Shan Saeed

Gold is on the rise. FED has finally decided to launch QE3 to stimulate the economy which is showing little improvement in economic growth. With Romney sharing in one of his addresses that Gold standard needs to be brought back, giving further boost to Gold prices in the international markets. Even Nobel Laureate and New York Columnist Paul Krugman wrote in New York Times titled Galt, Gold and God on Aug 23, 2012 issue.
I’ve watched markets and how they act for over 14 years now. All of that history has helped to give me an edge when investing in the financial markets and advising my investors globally. 
For instance, many investors say that $1,900 per ounce was the ultimate top on the price of gold. I tend to disagree with many people and investors. I was the one of the persons coming out with a shout of $2000/per ounce for gold in the next 4-years in 2009. If we pay attention, the market will demonstrate us that 2000 is very much on the cards. How does the market guide us? It guides us by going through a period of consolidation. Gold has consolidated in a sideways triangle [descending triangle] for right at a year now. 

Well, when any financial asset is “topping out,” it doesn’t consolidate anywhere near its highs. Instead it has a blow-off top and makes another failed stab at the highs and then sinks like a rock. That’s not what I’ve seen happen in the price of gold at all. But those who don’t understand market patterns and the cycles that it goes through think that the pullback and range that has happened in gold is a sign of weakness. But actually it’s a sign of strength. Plus Gold has got solid fundamentals, i.e. REAL CURRENCY, NO DEFAULT OR DEPRECIATION RISK OR COUNTERPARTY RISK.

You see, any asset occasionally needs to tread water sideways for a bit to build a base from which to launch from. It’s actually a very healthy thing and keeps an asset from going parabolic into an unsustainable trend. Also, it’s been normal for gold to go through long periods of consolidation before hitting new highs. 
Pull backs and consolidation are part of the market game.

For instance, this happened going into 2008. Gold slumped into a range that bottomed in about eight to nine months and then hit fresh highs around 19 months from its peak (or 10 months after its lows). 
This very same pattern happened in 2006. Gold bottomed about five months later, but ultimately took around 16 months to go on to new highs. 

Both of these consolidations were followed by very “trendy” periods, where gold launched higher and seemed almost unstoppable. But that’s the kind of thing that routinely happens out of healthy, sideways consolidations. 

So, where gold stands now, it’s been within that descending triangle consolidation for about a year. Even within that consolidation there’s formed an even tighter consolidation known as a symmetrical triangle ever since last May. 
This symmetrical triangle will break out within the next month or two to the upside. The price target will push gold out of the roof and making manay investors rich.  That larger pattern has a minimum price target of almost $2,000 an ounce is very much there

In simple English, let me explain what the end result of all of this gold movement. It means that within a couple of months a spike higher in gold will happen. That spike will be large enough to shake up the gold bears, who thought gold had topped out. As it begins to stop them out and margin call them out of their positions, it will unleash quite a bit of buying pressure on gold, which will eventually take it up to around the $2,000 mark, likely within the next 9 to 12 months. 
China wil shake the market as she has already started a new market called PAGE i.e, Pan Asia Gold exchange just like COMEX ^ LME.

I believe we are at the bottom of gold’s range now and we’ll soon see it have mostly “up days” from here on as it begins its ascent higher. As gold trades above $1,675 an ounce, we’ll see the upward ascent speed up quite a bit. This will mystify many investors and have them scratching their heads because they’ve felt that gold was “dead in the water” for so long now. They won’t expect it to “come back to life” like that and they’ll wonder where all of this upside momentum has come from. Happy investing in the gold market.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK. 

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