Gold is A Buy for Foreigners

Technical Analyst & Editor
December 18, 2005

Gold in US dollar attracted a lot of attention in the past few weeks. It broke $500, went parabolic by reaching $540, then dropped like a rock to touch $494 four days later. It is now a hot topic among traders and investors, with many different opinions, forecasts, and predictions. At Traderscorporation, we don't discuss and are not concerned with why this and why that, we are only concerned with when. Many of our subscribers live outside of North America, and for these global investors, gold in their own currencies are now also in a roaring bull market, and this is the phase two I've been expecting, as price of gold is finally rising against all major currencies. What is even more important, is that with the support of foreigners buying gold, this gold bull market is no longer just US centered, it is now a global phenomenon. Those who have interests in gold and gold related investments can no longer stay fixated on gold priced in the mighty dollar alone, you must also become vigilant what gold is doing in other major currencies, with the strength in the dollar all thru 2005, the focus is no longer on dollar/gold, but Euro/gold, Loonie/gold, and Yen/gold.

As with any bull markets, smart money simply wait for a correction and buy the dips. Investors take advantage of the dips to accumulate during a bull market, and distribute them during bounces in a bear market. Investing is a fairly simple procedure, one only has to identify a major trend, and recognizes a dip.

The trends

Gold in Canada has clearly broken out of a ten year consolidation, and the major trend is firmly up.

Gold in Europe has also broken out of the decade long correction.

And in Asia where gold is always better than money. So, the major gold trends in foreign currencies are all firmly north, when can investors buy? What is a dip?

The dips

Our IP model identifies the dips in a bull market. While most gold observers are baffled by the extreme volatility this past week, our IP model alerts our Cdn investors for a buying opportunity. This is dip #2.

Gold in Euro is also at a buy point, this is dip #4. Continue to accumulate.

Asian gold buyers are staring at buy point #3, as long as the trend continues, put more paper money into hard assets.

Double dips

Gold buyers in North America have been buying the dips since 2003. Continue to accumulate on dips…..

With the US dollar back in an uptrend this year, US gold buyers are enjoying a double dip, with rising gold prices in an appreciating currency. US gold is up 10% in 2005, and the dollar is also up 10% this year, therefore US gold buyers are up actually 20% relative to foreign currencies.

Summary

Investors with a long term horizon should not be concerned with short term volatility in the gold pits, and gold is a very volatile commodity. The sharp corrections within a bull market occur suddenly and viciously, and could be quite traumatic to the inexperienced investors, and often they unload their positions in sheer panic. Yes, investors can lose money in a bull market. But for the seasoned investors, these over the cliff plunges present excellent buying opportunities. These sharp sell offs in a bull market is what I consider "right translations", a technical term of a bull market signature which has very bullish consequences. Perhaps I will cover that subject in my next article.

 

Jack Chan at www.traderscorporation.com

18 December 2005

Jack Chan is the editor of Simply Profits, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the US dollar bottom in 2011.

Minting of gold in the U.S. stopped in 1933, during the Great Depression.

Gold Eagle twitter                Like Gold Eagle on Facebook