New Video: Why Gold Will Not Make New Highs or Lows This Year

Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.

While we recognize that gold is one of the few commodity markets that people are really passionate about, the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, we want to discuss our interpretation of the markets cycle.

After spot gold made an all time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.

Here is the dirty little secret about the gold market. It can be a horrible investment and here's why:

Gold first started trading in the 80's and when gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? Thats right it was the pros, the guys who made their living trading. As a result, gold hit an all time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. We don't know what your timeline is, but 25 to 30 years is an awful long time to get even again.

So what is really happening in this market?

Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.

Based on the declining value of world currency against gold you might ask "why isn't gold trading at $2,000 or even $3,000 an ounce"? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.

So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.

Here is what we've been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you're interested in the next big move in the gold market.

Before gold can move higher it needs to create what we call an "energy field". The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80's mentioned earlier.

The energy fields we have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.

With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.

To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.

On the on the upside we will also be looking for gold to make a natural cyclic high in October or November of 2011. It's impossible to predict the future with any degree of accuracy, however when we look at the cycles in gold this reads as a pretty good bet.

No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.

http://www.ino.com/info/542/CD3116/&dp=0&l=0&campaignid=3

As we always discuss, in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.

So just click here to watch today's new video and as always the video is free to watch. Please take a minute to leave a comment and let us know what you think about the direction of this gold market.



Also watch....The "Super Cycle" in Gold and How It Will Affect Your Pocketbook in 2010



Share

What's The Next Stop For Gold?

After hitting our first upside target of $1,110 two days ago, gold prices backed off but still managed to close at their best levels today for a new record high close in New York basis the spot gold.

The question now is, what’s going to happen to gold after it hit our first target level?

The main trend continues to be positive and we believe that any pullback in this market should be met with good support. It is possible that we could see a pullback of $20-$25 which would not change the overall positive trend of the market which we see continuing until the end of the year.

As readers of this blog know, we have an upside target zone of $1,250-$1,300 an ounce for gold. While that target zone is still in place, we believe that the huge “energy field” that we’ve discussed in our earlier gold videos is capable of pushing this market higher.

In this new video we explain some of the areas that we are looking at and also some of the places where you can place tight stops to lock in profits.

Just Click Here to watch the video and as always the videos are free to watch and there is no need to register. We would love to hear your views on gold in our so please feel free to leave a comment.

New Video: Gold, It’s All Falling Into Place

You may have watched our earlier video on the gold cycles and how important they are in this particular market, at this particular time. Today’s action is indicative of the cycle that we were talking about in the video as it’s pushing gold prices down into a cyclic time window.

I wanted to follow up with this new short video to show you where we believe there should be some good levels to get into a long gold position. The energy fields we’ve discussed before in gold and other markets are still very much intact and are getting wound up for the big move we’ll see later this year.

There is no need to register to watch this video and you can watch it with our compliments.

Just Click Here to watch the "Gold, It's Falling Into Place" video

If you enjoy this follow up, share it with your friends. We am sure they will find our point of view both different and at the same time educational. Please feel free to leave a comment about your view on gold.