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« USD Decline To Take Breather Before Breaching 75 | Main | Gold Up in Hong Kong »
Wednesday
Nov112009

Gold: Load Up On Any Weakness

Gold: Load Up On Any Weakness

Gold has been on a terrific run of late, breaking above $1100/ounce in what many gold bugs would say is a move that is well overdue.

For those of us who are long gold, the last few weeks have done wonders for our portfolios and gold positions. However there are those who may still be on the sidelines, who have been eagerly awaiting an optimum buying opportunity, or those who have only recently been made aware of the gold story and now wonder if perhaps it is too late to jump aboard this gold bull market.

The simply answer is – No! It is most definitely not too late to get long on gold and make some serious profits. The fact that the DOW is putting on a couple of hundred points is all over the front page of mainstream financial websites, and gold being at an all time high barely makes the top five stories of the day, tells us that the herd has yet to even recognise this gold bull market, which means there is still plenty of upside still to come.

As to when to purchase your gold positions, we would say that buying on any weakness is a good idea. Currently gold is overbought with the Relative Strength Index over 70, but buying when the RSI is 50 or close to 50 appears to be a good strategy for those looking to build long positions on gold.

Whilst ideally we like to buy with the RSI below 30, since gold is in a major rally right now buying at those levels is somewhat unrealistic for the short term, since gold’s RSI rarely drifts below 50 during these rallies.

So to those still looking to buy a position or to add to their holdings, we think the best idea is the to be patient, watch the RSI like a hawk and pick up positions when the RSI drifts near 50. But the most important thing is to make sure you have a long position in gold, as the most impressive gains are yet to come.


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Reader Comments (7)

Hello again,
A question regarding this edition: when you speak about buying gold at the proper time do you mean the metal, shares of miners, or perhaps both?

I am thinking about weeding out some miners that don't seem to be interested in going anywhere during this gold rally, e.g., Hecla and a few others. How much patience can we have to hang in there when the money might be better placed elsewhere? Are you dumping any non-producers?
John

November 11, 2009 | Unregistered CommenterJohn Ell

I agree with John . Should we sell our heavy weights such as Rangold and Kinross and look for better gains in the smaller stocks but wait for a pull back first?

November 11, 2009 | Unregistered Commentergold bug

Don't mean to be a wet blanket, but I see a broadening megaphone shaping up in the Gold chart. This is bearish and signals a top is imminent if the pattern continues.

November 11, 2009 | Unregistered CommenterMark Berger

Does this gold run reminds you of how oil ran ? Relentlessly up only to come crashing down again ? ? Something is not normal . Silver way behind.
Just a thought .

November 12, 2009 | Unregistered CommenterH

John,

Sure it is important to trim a portfolio when stocks are not performing, we unloaded most of our holdings in Silverado recently and now have only a token position.

Hecla could do a lot better, maybe we ought to do an update on it, we still hold it and have not sold any our HL shares, it has improved over the last week or so.

November 12, 2009 | Unregistered CommenterGold Prices

The mantra of juniors, juniors is popular but we think it is still a little early to be changing and that the bigger producers will do better in the short to medium term. Also take care with what you select, a lot of those juniors will never find anything. If you can, stick with the companies that are actually generating some cash and have great prospects.

Mining as Agnico-Eagle is experiencing right now is not an easy task and they are experienced miners, some of the juniors have yet to gain that knowledge so the risk is greater.

November 12, 2009 | Unregistered CommenterGold Prices

Mark,

We noted the megaphone, but believe either the USD will consolidate for a while on 75, and so gold should too, or if the USD breaks down through 75 this will cause a rise in gold that will also negate the megaphone and its bearish connotations.

A valuable observation though, thanks for the comment!

November 12, 2009 | Unregistered CommenterGold Prices

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