Recently a
news item was brought to my attention which underscores the long-term
significance of gold as an investment.
A 500-year-old treasure has been discovered in a Hindu temple with
approximately $20 billion. The
treasure consists mainly of gold and precious stones. Below is an excerpt from a newspaper
describing the treasure:
“Experts
have discovered a huge treasure underneath the Hindu temple of Padmanabha Swamy in the city of
Thiruvanthapuram in India. The temple serves as a
shrine to the Hindu Lord Vishnu. The shrine has been around since the 10th
century, but the six offering vaults have been sealed since the 1930s. Five vaults have been opened. About
$20 billion in treasure was found. The sixth vault has yet to be opened
because it is sealed with special locks, but it is thought to contain even
more riches. Hari Kumar, a temple official, said,
‘Though we knew that offerings made to the temple by devotees for the
last 500 years were lying in these secret cellars, the scale of the treasure
has definitely surprised us.’”
The discovery
of this ancient treasure has sparked a major interest in the mainstream media
as indeed it a discovery of this magnitude would be expected to. Reading through some of the reader
comments this story provoked, I found the following comment to be amusing in
its blithe dismissal of the treasure’s monetary value: “When you
consider that a hedge fund manager can bring home a billion each year as a
bonus, $22 billion over 500 years isn’t that big a deal.”
In a time
when we’re used to hearing terms like billions and trillions being
thrown around every day, I supposed a measly billion doesn’t seem like
much. And perhaps $20 billion
stashed away for so many hundreds of years doesn’t resonate as much
with today’s jaded news audience, accustomed as it is to hearing money
spoken of in the trillions on a daily basis. But unlike the tens or even hundreds
of billions of dollars which today’s hedge fund managers oversee, there
is a vast difference between it and the billions of dollars
worth of gold from centuries gone by. The chief difference lies in the fact
that the gold from 500 years ago is still worth a fortune today while
today’s billions could be reduced to mere pennies on the dollar in a
matter of days or even minutes in today’s fast-moving financial world.
The billions
of today are represented primarily in electronic entries and are ephemeral
creations of debt in many cases.
These “billions” will almost certainly have little or no
value 100 years from, while the wealth accumulated in the form of hard assets
possessing intrinsic worth, notably gold, will always have value in the long
term. Indeed, the lesson learned
from the $20 billion temple treasure is that gold always maintains inherent
value despite the ravages of time and chance. Today’s electronic billions, by
contrast, are far more vulnerable to these ravages and unlikely to maintain
long-term value. For long-term
investors, the best choice is obvious and has once again been validated.
Returning to
the immediate-term outlook, gold has clearly benefited from the latest
weakness in the U.S. dollar. The
impact of dollar weakness on the gold price is obvious: a weaker dollar
generally translates into a strengthening gold price. The question whether we can reasonably
expect gold to continue moving higher after it has already dramatically
overstretched from its nearest short-term trend lines in recent weeks? When upside momentum has been
established and becomes self-perpetuating, as it has in the gold market, an
“overbought” or overstretched gold price can always push higher
before the proverbial rubber band snaps back and price declines. If this were a simple case of looking
at the market technicals, one could argue that
gold’s latest move to new highs has caused the price to over exceed its
median trend line, which in turn would suggest a corrective move lower is in
the offing.
In the
present case, however, gold has another powerful factor in its favor right
now, namely fear of the unknown.
The ongoing debate over whether or not the U.S. debt ceiling should be
raised is currently fueling the widespread move into gold as investors on
both the retail and institutional sides of the fence buy gold as a safe haven
against the fear of what may happen to the USA’s credit rating in the
fallout over the nation’s debt debate. Even if Congress chooses not to take
the deflationary rout in addressing the nation’s over-indebtedness,
gold should still benefit from the classic fear and uncertainty factors that
will continue to swirl around the nation’s – and the developed
world’s – debt problems.
From a purely
technical standpoint, the gold price remains decisively above two of its most
important trend lines: the 30-day and 90-day moving averages. If gold remains above its 30-day MA on
a closing basis on any near term pullback, its forward momentum will remain
intact and it should be able to continue its pattern of higher highs and
higher lows. Whenever gold
decisively violates its 30-day MA on a closing basis, it tends to lose
momentum.
The most
important intermediate-term consideration for gold is the 90-day MA (green
line in above chart). This
particular moving average has kept gold’s interim uptrend intact during
the last couple of pullbacks as you can see here.
Gold &
Gold Stock Trading Simplified
With the
long-term bull market in gold and mining stocks in full swing, there exist
several fantastic opportunities for capturing profits and maximizing gains in
the precious metals arena. Yet a
common complaint is that small-to-medium sized traders have a hard time
knowing when to buy and when to take profits. It doesn’t matter when so many
pundits dispense conflicting advice in the financial media. This amounts to “analysis into
paralysis” and results in the typical investor being unable to
“pull the trigger” on a trade when the right time comes to buy.
Not
surprisingly, many traders and investors are looking for a reliable and
easy-to-follow system for participating in the precious metals bull
market. They want a system that
allows them to enter without guesswork and one that gets them out at the
appropriate time and without any undue risks. They also want a system that automatically
takes profits at precise points along the way while adjusting the stop loss
continuously so as to lock in gains and minimize potential losses from
whipsaws.
In my latest
book, “Gold & Gold Stock Trading Simplified,” I remove the
mystique behind gold and gold stock trading and reveal a completely simple
and reliable system that allows the small-to-mid-size trader to profit from
both up and down moves in the mining stock market. It’s the same system that I use
each day in the Gold & Silver Stock Report – the same system which
has consistently generated profits for my subscribers and has kept them on
the correct side of the gold and mining stock market for years. You won’t find a more straight forward and easy-to-follow system that
actually works than the one explained in “Gold & Gold Stock Trading
Simplified.”
The technical
trading system revealed in “Gold & Gold Stock Trading
Simplified” by itself is worth its weight in gold. Additionally, the book reveals several
useful indicators that will increase your chances of scoring big profits in
the mining stock sector.
You’ll learn when to use reliable leading indicators for
predicting when the mining stocks are about o break
out. After all, nothing beats
being on the right side of a market move before the move gets underway.
The methods
revealed in “Gold & Gold Stock Trading Simplified” are the
product of several year’s
worth of writing, research and real time market trading/testing. It also contains the benefit of my 14 years worth of experience as a professional in the
precious metals and PM mining share sector. The trading techniques discussed in
the book have been carefully calibrated to match today’s fast moving
and volatile market environment.
You won’t find a more timely and useful book than this for
capturing profits in today’s gold and gold stock market.
Clif Droke
Editor, The Daily Durban Deep/XAU Report
Clifdroke.com
|