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This Is How To Stay On The Right Side Of Gold Instead Of Complaining About Gold Falling

Scorpio

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#1
This Is How To Stay On The Right Side Of Gold Instead Of Complaining About Gold Falling

Wednesday December 21, 2016 14:27

Lately I have been receiving an increasing number of emails from precious metal investors complaining about gold falling. I empathize; no one likes to lose money. Most investors understand the impact of the rise in dollar but they question the market ignoring all the risks that are out there. Investors also understand the safe haven demand is lessening as the stock market rises but they correctly point out that not long ago many gurus were proclaiming gold was also a ‘risk on’ asset.

Here is my advice -- learn to stay on the right side of gold, stop complaining and stop listening to gurus who always have a justification after the fact. Let us learn from the following example.

Assassination

The chart linked below shows the time when the news broke that the Russian ambassador to Turkey had been assassinated by an off duty Turkish policeman. The gun man shouted, “Do not forget Aleppo.” For the longest time Aleppo was the stronghold of the opposition in Syria. Recently with the help of Russia, the government in Syria has captured Aleppo. Russia and Turkey have pledged détente.

Terror

The chart linked below shows the time when the news broke that a terrorist attack with a truck had killed 12 in Berlin's Christmas market.

Short Term And Long-Term Charts Of Gold

The annotated chart is of gold futures (GC_F) but similar action can be seen on charts of popular ETFs gold ETF (GLD), silver ETF (SLV), miner ETF (GDX) and leveraged ETFs (NUGT) and (DUST).

The VUD indicator is an extremely sensitive measure of the true buying demand in real time. The VUD indicator shows very little buying in the face of bad news that should have caused aggressive buying. For this reason, the drop in gold price later was projected. The projection later came true.

It is also important to look at the longer term gold chart for additional insights.

Compare Gold Chart To Dow Jones Industrial Average

To understand the concept of true buying demand, compare the short-term chart of gold above with the two short-term charts of the Dow jones Industrial Average below.

The annotated chart is of DJIA futures (YM_F). The reason I am using a futures chart instead of charts of popular ETFs such as S&P 500 ETF (SPY), Nasdaq 100 ETF (QQQ) or Russel 2000 ETF (IWM) is that the futures are more sensitive to the news and often move before ETFs move.

The chart shows the timing of the news and how the VUD indicator behaved. The VUD indicator is an extremely sensitive measure of the true buying demand in real time. VUD stayed green throughout indicating that the true demand to buy did not wane on the bad news even when prices dipped. VUD is derived from tick data.

It is worth noting that the intensity of the true buying demand was significantly less than on December 7th when the performance chase by the money managers started. Compare the VUD indicator from the chart above to the chart below.

You will notice that intensity of VUD has lessened.

The Main Point To Learn

The main point to learn here is that to be consistently successful at investing and trading, focus on true buying demand and true selling demand.

To most investors it would have been logical for stocks to fall and gold to go up on the assassination and terror. Instead stocks went up and gold fell. Why did this happen?

As demonstrated by the charts shown above, the answer is that there simply was not a lot of true buying demand for gold but there was true buying demand for stocks.

Those readers who are ambitious may want to also take a look at How Smart Money Gains An Edge In Gold And Silver Investing

Current Ratings On Gold And Silver

Here are our current ratings from The Arora Report precious metals algorithms.

  • Suspended in the very, very short-term, a lot depends upon Chinese day traders. There is simply not enough data to rigorously model their behavior.
  • Mild Negative in the very short-term.
  • Mild Negative in the short-term.
  • Negative in the medium-term.
  • Negative in the long-term.
  • Positive in the very long-term.
Inputs to algorithms include technicals, relationship between currencies, interest rates, sentiment, money supply, global geopolitical picture, global GDP growth, inflation in key countries, leading indicators of inflation, risk appetite, etc.

Some of the inputs are adaptive, i.e., their weight changes based on conditions and co-relations. The adaptive nature of the algorithm has been the most important reason behind consistently accurate calls on gold and silver by The Arora Report over the years. Experience has shown that algorithms that are static stop working after a while because market conditions change. For this reason, investors and traders should avoid algorithms that are fixed.

These ratings are reviewed daily and changed frequently for subscribers to The Arora Report to help both long-term investors and short-term traders. These ratings are used by bullion dealers, jewelers and investors across the globe. For definition of time frames, please click here.

Full Disclosure: As appropriate, subscribers to The Arora Report are provided precise buy zones and sell zones as appropriate. Further, subscribers to The Arora Report may undertake short-term trading positions in addition to the very long-term generational opportunities.

By Nigam Arora
Chief Investment Officer
Courtesy of www.TheAroraReport.com





Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

http://www.kitco.com/commentaries/2...nstead-Of-Complaining-About-Gold-Falling.html
 

Irons

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#2
Cheap Gold for the next few years IMO. Glad to see it too easy prices takes the pressure off stacking. Nice and easy grab coins as they come up.
Pick up a couple expensive oddballs that high prices would have kept me away from. It also brings out ebay panic sellers.
All is good, next rally begins around 2026.
 

goldielox1

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#3
Cheap Gold for the next few years IMO. Glad to see it too easy prices takes the pressure off stacking. Nice and easy grab coins as they come up.
Pick up a couple expensive oddballs that high prices would have kept me away from. It also brings out ebay panic sellers.
All is good, next rally begins around 2026.
Despite all the negative publicity, Au is up 10% YTD and AG is up 20% YTD.
 

Zed

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#4
Buy cheap long dated out of the money puts on GLD after every serious run up, take a profit after the inevitable reaction and use it to buy more physical. That way you hold your metal and don't feel any pain what so ever when it tanks... you just buy more. Been sayin things along those lines for ages. Hell you can even use one of the short gold ETF's, GLL UltraShort Gold ETF or summin. That is "How To Stay On The Right Side Of Gold Instead Of Complaining About Gold Falling".
 

Zed

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#5
All is good, next rally begins around 2026.
Hmmmmm... that is a long time, we have one decent panic due now then another just past 2026 if we stay on this cycle. I'd say more action sooner with the way things look, waiting for a pot to boil and all that but IMO this year was the start of something & not the end.

2c

FWIW
 
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edsl48

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#6
In my diversified investments I consider gold and silver to be more of an insurance policy as opposed to some type of get rich scheme. To be quite honest I hope that I do not happen on days when gold and silver go ballistic because of anarchy, war or other calamity such as a complete debasement of the currency; however should those events happen I want to be insured and the metals are a way to protect myself. I purchase regularly regardless of the price and buy more on a fixed dollar amount rather than on acquiring certain items regardless of price. I also consider that if all goes well my descendants will have the start of a stack for themselves. In other words for you stacker's, be happy your metal buys do not soar; the causes of future soaring metal prices are not in your best interests.
JMHO
 

Flight2gold

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#7
Hopefully the incoming administration will pay more than lip service to the gold standard.
 
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