Gold, is it a Candidate for Investment?

Like any another Commodity, prices of precious metal Gold depend on demand and supply, when the prices of Gold move up from say 1000 dollars per ounce to 1200 dollars per ounce, it means that earlier 1000 dollars invested were sufficient to buy 1 ounce Gold, but now an investment of 1200 Dollars can let you own 1 ounce.

Now if we consider investor demand for Gold has not changed then

• Either the informed investors are betting supply of Gold would be reduced against the number of dollars likely to float around the world in future and have bought Gold in anticipation.

• Or The informed investors are betting that there would be a huge supply of dollars in future which the supply of Gold would not be able to match up, loaded with dollars the investors would be bidding up the price of Gold, in anticipation of the future Informed Investors have bid up the prices of Gold

Looking at the charts, we get a picture that for the 2 years between 2007 and 2008, new investors buying the gold and old investors selling the Gold were equally placed in a price war and whenever new investors got a hold of Gold at near 860 dollars they would buy the Gold while whenever the prices rushed above 970 dollars, old investors would sell to book profits in there investment, A small period of 2-3 months between september to november 2008 saw sellers gaining an upper hand, new investors seemed as loosing patience and triggering stop loss, prices crashed unto 700 Dollars an ounce, but the introduction of TARP (troubled asset relief program) in october 2008 saw the informed investors bidding the prices of Gold above the previous high of 1040 dollar.

Looking to invest in Gold, wait for your desired investment target to witness a price of 970 Dollars, or the other way round cross the previous 2009 high, there are many ways (fundamental and technical) through which you can zero in on the price to invest in an asset and then book your profits and exit from the asset, also you can leverage through options if you have worked out and know exactly the time by which you expect your investment to reach a level where you can book profits, I have shown you the most basic identifications, if you wish to know the advanced ways subscribe through the PayPal link given at the top, for further queries, write to click_dotcom@rediffmail.com

now lets see the consequence of this inflation on the lender, and how he has been fooled into believing that he is getting some return on the investment, nurturing the view that lending money to the government is the safest investment, as the government takes money from you and returns the original investment with some profits on expiry of the contract, and government is most unlikely to fail in repaying the loan, the lender falls into the trap, but the lender fails to understand the complete implications of investing money in government bonds, when the government is going to print money to repay the loan, suppose the lender is saving money to buy his dream home in a posh area, which he cant buy immediately due to shortage of cash, and doesn’t wants himself to be in debt so he saves the money instead and to get some return on investment, he invests it into the Government bonds thinking it as the most safe investment, but the government is printing money to repay the debt leading flooding the markets with paper money, increasing the cost of the lenders dream home much more than his assured return, so at the time of the expiry of the contract if the lender is getting 150 for very 100 invested the price of the dream home has rocketed and reached 300 for very 100 making it a loss of 150 Rs for the lender, so actually the dog kept to safeguard the house has stolen the beef in the house, so then where to invest money in this highly unpredictable situation where the unemployment is increasing but prices of the commodities too are increasing, the government is reporting deflation but the expenditure from the pocket is showing inflation, well you have to decide in the mind whether you expect growth to pull down the inflation, or the inflation to pull and show some inflated growth, if you feel inflation is going to win then you are better off investing in Indices via Exchange Traded Funds (ETF’s), albeit putting a stoploss somewhere round, for example Dow Jones Index has traded for most part of this decade in the range of 10K to 12K, so breaking up above 10K and maintaining it for considerable time could be considered positive while a break down below 10K should be considered negative and the Dow can then retest the March 2009 lows. An alternative investment could be buying Gold and maintain a stoploss of close to $1040, as gold has traded for a long time close to $1040 and just given a breakout above $1040, so keeping a stoploss at $1040 one can go long in Gold for an initial target of $1400, and if $1400 also broken sustainably then Gold can target $2000.

 

Why Inspite of Financial Markets Crashing Gold has Stayed Up

When most of the financial markets in the World and even the Commodities especially Crude Oil had fell from 140$ to below 35$ why is it that the Gold is holding on, What could be the reason, do the investors believe that Helicopter Ben (i.e. Federal Reserve Chief Ben Bernanke) will inflate the World by dropping cash and so it would be better to buy Gold and stay safe when Banks world over are going bankrupt, but instead of buying Paper Gold I feel investors should be buying Gold Coins, and have Physical Gold with them via Gold Coins, http://www.goldcoinsgain.com is one of the places from where you can purchase gold coins. http://www.goldcoinsgain.com also offers free Gold Guide, You can also contact http://www.goldcoinsgain.com through 1-800-940-7793, Analysis on how to trade Gold could be found on there website at http://www.goldcoinsgain.com/gold-market-analysts.html

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GoldCoinsGain.com is Aurum Advisors most comprehensive resource for gold coin and gold bullion acquisition. There are different types of Gold Bullions that you can buy from them the varieties are Liberty Quarter Eagle, Gaudens Double Eagle, Gold Amreican Eagle, American Buffalo etc.