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« The Eagle Soars | Main | Gold: to fall with base metals? »

Gold: Update 23 July 2006

Where do we go from here? A myriad of predictions swamp the media. Hourly broadcast news bulletins are analysed in fine detail, but has anything really changed?

If you are a Day Trader, then I suppose monitoring by the second is to be expected. However, this should not be necessary for most investors. Investment, with an element of risk is what we try to do on this website.

In our opening article; Reasons to invest in Gold we laid out the fundamentals reasons for our future investment decisions. When we read through them again we find that not much has really changed other than some of them have had more airtime than others. The weight attributed to these reasons may cause day-to-day fluctuations but the effect on gold prices is negible and short lived.

When we examine the chart below we can see that gold is still on an upward trend and comfortably above its 200 day moving average. The other indictors, which are the Relative Strength index, the Ultimate Oscillator and the Stochastic, are all in the middle of their ranges. What does that tell us? Well, in the short term the direction is pretty much neutral. The indicators are pointing down so we could say that’s a slightly negative signal.


Our plan is not to invest for tomorrow or next week, but at least for a year or so. Should there be a rapid upward movement we may take some profits off the table but we will certainly tell you when the time gets closer.

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Reader Comments (2)

I believe oil will drop to around $40 over the next 2 years. If I am right what will happen to the price of gold if anything?

July 26, 2006 | Unregistered Commenterfrank

Gold is more linked to the devaluations of fiat paper currencies than the price of oil.

However, gold mining stocks will have much lower energy costs and so they will make a larger profit on the gold that they mine and sell.

So a drop in oil prices won't affect gold prices, but it should increase the value of most gold mining stocks.

July 26, 2006 | Unregistered CommenterBob

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