The past few months have been absolutely crazy in the financial markets. Financial advisors and banks are taking a beating from both the market condition and clients as individuals around the world are losing 30+ of their investments. We have seen oil prices drop over $110 per barrel from the high (73% decline), and the US dollar tumbled down to 71 and rebounded to 88 (23% gain) all in the mater of months. Risk Management is what is needed if we want to stay in the game over the long term. Follow strict risk/reward rules is a must so that we don’t not get caught chasing stocks and funds only to have them turn around on us a few days later.

Focusing on keeping risk low for potential trades is crucial for turning a profit over the long run. In short I look for a basket of indicators including candle patterns and volume to be in favor when buying or selling a stock or fund. When a fund generates a buy signal I wait for a low risk entry point near my support or resistance level depending if I am looking to go long or short. I need to see a perfect setup so that the odds are favoring my side. Only then will I take a stab at the market. The biggest issue with this is that I do miss a lot of good trades, but the key here is that most of my trades are profitable and that is what makes it so powerful. I would rather make 20 trades a year, than 150 trades and make the same profits.

This Weeks Analysis on Gold

Gold continued its push higher last week getting a lot of investors and traders all excited. The daily chart does look strong and it is currently on a buy signal. But buying at this level is much too high of a risk.  The price of gold is trading at the top of its 4 month trading range which previously led to a 20% selloff in bullion. Our support trend line is 10% away from the price of gold making it out of reach still. I trade reversals when risk is only 3% from my stop/support price.

Daily Gold GLD Chart

Gold Stocks

Gold stocks have been struggling to move higher and last Friday gold made a nice move higher while gold stocks sold down. My last article talked about how trading gold (GLD) may be a better investment then gold stocks right now simply because of the bearish broad market. The broad market looks like it’s about to make another leg lower and when the broad market sells off, it pulls all stocks with it. The daily chart of the HUI Gold Bugs Index shows precious metal stocks moving sideways while gold pushed higher. When gold stocks start to underperform the price of gold I tighten my stops and mentally prepare myself for gold to pull back. The smart money always seems to move in and out of stocks faster than the commodity which is a topic I mentioned in a previous report as well.

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Gold sallied forth to advance $100 per ounce within the space of two days this week.  That left the price bar of Gold, as displayed on a chart, sitting up there all by its lonesome at a closing price of $897 per ounce on Thursday, September 18.  We have not seen Gold prices at that level in more than a month.  It was so very, very tempting to conclude that Gold was on a new tear, back toward the storied Castle-in-the-Sky $2,000 per ounce. However, a closer look at the shape and other details of the price bar pattern yesterday tell not of a new bull market in Gold.  Rather, they tell a tale of Warning to those who know how to read Japanese Candlestick patterns.

Specifically, yesterday’s price bar on the Daily chart was a Spinning Top, with long shadows (“tails,” or “wicks”) both above and below the “body,” which is the area of the Candle between the opening price and the closing price.  This reveals Indecision in the marketplace.  There had been great volatility in the Gold market that day, with prices ranging far in one direction and then far in the other, but at the end of the trading day the closing price was not very far away from the opening price. A closer look at the action, as revealed by the ten-minute chart, revealed a modified, or “corrupted” if you will, Evening Star pattern in which the Star was a Shooting Star.  There was no corruption in the Shooting Star itself; it was a beautiful example of the type.

Furthermore, the bar which followed the Shooting Star completely engulfed it, and the fourth bar of the series was a “Hanging Man.”  All of these together – the Shooting Star, the Engulfing bar, and the Hanging Man – have bearish implications.  And finally, the four bars together we take to be bearish, even though not a classic Evening Star pattern.  All of it foretold the likelihood that Gold prices would not continue their upward path; rather, that prices would fall. That is exactly what happened today, September 19: Prices fell more than $32 per ounce.  No doubt many investors bought Gold yesterday on the strength of their perception of the advance and, especially, of the gap-higher close on Thursday.  It certainly looked as though Gold was setting up for another voyage to the clouds.

And yet, those who understand the Candlesticks not only did not buy near the market close yesterday, or today (Friday); they voted in the opposite direction with their money, went Short or bought Puts, and were rewarded with a $32 gain. There is no substitute for learning how the Candles operate.  Every investor and trader owes it to himself or herself to at least learn the basics, not only to identify good trade setups but also to keep himself or herself out of bad trades for failure to understand the signals.

Gold investing has become one of the most popular safe-haven diversification methods in the past decade because the downfall of the United States economy has sparked nationwide interest for history’s most cherished precious metal. Masses of investors are turning to gold investing because the metal has outperformed most other traditional investments in the past few years while at the same time keeping portfolios safe from large losses that have become common with riskier assets like stocks, bonds and real estate. Below I have listed and explained 3 tips for successful gold investing that could help you maximize your profit and wealth preservation with bars and coins:

1. Analyze Your Portfolio = It’s surprising how many investors make investments without first analyzing their portfolio in order to determine investing goals and needs. In order to succeed with gold investing, you want to ensure that you are purchasing the right product for the right reasons. Are you a short-term profit seeker? If so, bullion bars and coins may be right for you. Are you a long-term wealth preservation seeker? If so, certified rare coins may be right for you.

2. Explore The Market = Exploring the market is important because you want to be as informed as possible with various aspects of your diversification. Learning how to track the daily spot price, researching bars and coins as well as finding the best dealers is critical for investment success with gold.

3. Invest Appropriately = Once you have done your due diligence, it is then time to invest appropriately. Investing in gold is a very exclusive diversification because it could hedge your portfolio from significant losses that have been common with riskier assets like stocks, bonds and real estate. Leading gold investment advisors recommend around a 25% net worth diversification because this ¼ hedge could protect the other ¾ of your wealth.

If you would like to learn more about gold investments with North America’s only long-standing precious metal firm that holds an A+ Better Business Bureau rating, contact the Certified Gold Exchange and receive your free “Insider’s Guide To Gold Investing” by visiting https://www.certifiedgoldexchange.com/goldrequest/article/Successful-Gold-Investing

For years we have been speaking and writing about the massive bind the Fed now finds itself in. With price inflation rising – read as food and energy skyrocketing — and little hope for nominal interest rate increases – read as housing too weak for higher rates – negative Real Interest Rates (nominal rates less inflation) looks set to persist for some time. Now why is that important?

Firstly, not only do negative real interest rates make holding non-income producing assets such as Gold attractive, but an environment where inflation is allowed to have its way and economic growth is sick (stagflation), is tantamount to the perfect storm for Gold Stocks and other Precious Metals! So what do you do?

You load up on assets leveraged to the price of Gold – namely Gold stocks.

Wrong!

As Old Gold Bulls we have seen this situation before. A low growth high inflationary environment is poisonous for equities – Gold stocks included. And whilst the storm persist in the equity markets it will either drag gold stocks lower or prevent them from fully expressing themselves to the upside! That’s why we encourage investors to have a portion of their portfolio exposed directly to the metal either through ETFs, Futures or Physical.

Hunting Elephants

There is no doubt that an equity risk premium has weighed heavily on Precious Metal equities and that stabilization in equity markets would certainly benefit such stocks. But that’s old news.

What we consider interesting and downright fascinating is the nature of Gold Equities investors should be focusing on over the next year.

Conventional wisdom is that the juniors are where the investment gems lie. We don’t disagree – entirely.

Over the longer term (3-5 years) the fundamentals certainly favour late stage explorers and emerging producers, but an overlooked market dynamic causes us to lean rather towards their larger cousins.

As we have alluded to above, Gold Stocks and other Precious Metal equities are equities and more often than not subjected to the same forces as the general equity market. One such force is the veritable WALL of passive indexed money. By some accounts amounting to several TRILLIONS of Dollars.

And what’s the passive indexed money saying?

Firstly it’s saying that the long period of outperformance by small caps versus large caps bottomed in 2006 and the trend has since been towards large caps.

Secondly…

The trend in large caps from value to growth also looks to have bottomed around late 2006. We define growth as earnings growth of +15% p.a. and/or PEG ratio of around 1.5.

These trends resonated well with us as large cap Gold producers beat out small cap miners over the last year leaving many a gold stock speculator highly frustrated.

Where to find such Elephants that will benefit from these trends?

We would begin by looking at components of the Gold Stocks ETF (GDX) or the Amex Gold Bugs Index (HUI).

Gold stocks and more commentary follow soon…

All science based prediction has general fundamental assumptions and principles that are straightforward.  All prediction is determined by the measurable characteristics of the variables under study, and their interaction with the environment, during a specific time boundary or episode.  All prediction involves assumptions regarding the underlying nature of the variables, and what happens that is relevant during the duration of the time envelope.  You need to have an observable database for the scientific method to work.

So, prediction as the term is used herein uses a data base of at least one prior data point of same or similar information to that which is to be the target of our effort.  To find the next gold nugget you must have first found a previous one.  The information of the data base is collected by our senses.  The information is manipulated according to the rules of the scientific method, evaluated statistically, and the validity is judged according to the laws of valid reasoning to produce a specific target value for a specific point on a time horizon.

Accordingly, there are five theoretical levels of such prediction.  Each has merit.  At Level 1 Theory, I assume that the best measure of the variable I wish to estimate at the next time horizon will be the observed measure defined in terms of operations used to measure it at this time horizon.  The environment is assumed to remain stable.  Inferences are minimal and short term.  There are no statistical assumptions made regarding either the measure or its environment.  Prediction quality is threatened by any change in either the measure of the variable or the environment.  This Level 1 Theory of prediction does not tell you when to expect a change in environment or what the effect will be when you detect the change.

Remember, even a single trend analysis is not possible with this Level 1 Theory strategy.  Even so there is some evidence for at least some stability of prediction across time.  Also, there are times when the environment is consistent and Level 1 Theory is as good as any other.  A great deal of prediction is of this sort.  It often works because in a short time episode there is a lot more orderliness and inertia to the universe of experience than there is randomness.  So, where you find one gold nugget is assumed to be the best place to look for another.

So, where you find one gold nugget and soon another, you assume the next will be along the same stream course but up or down you are not sure until you collect multiple samples that establishes the trend.  Level 2 Theory requires much more work than Level 1 did, but it has many benefits that make it worthwhile.  It also can introduce diversions that can be a trap of your time.  It can be interesting to look at graphs and charts and do statistical analysis.  Typically, we have been taught we have to do those things.

You should actively collect information about the areas you would consider for prospecting.  There is no one piece of information on a location that can stand alone as a predictor of its nugget finding merit.  The potential search environment is in apparent garbage can chaos.  There is some hope of bringing sense to it by imposing our constructs of meaning.  Proceed with an examination of locations by a careful analysis of the constructs you consider most meaningful to you, and apply a multiple cutoff strategy.  The minute a location did not pass a hurdle eliminate it from further consideration for your search.

Stepping back a pace, I would have selection definitions for locations I would consider for prospecting.  At this point, I have just narrowed the number of acceptable candidates for prospecting to locations in which I would probably like to search and in which I would be willing to conduct operations on a daily basis.  Evaluation will always be an amalgam of qualitative and quantitative measures where the location has to meet minimum specifications.  If I do not see anything I like, after applying these screens, I would just continue looking for another location.

Buying gold coins is one of the best and safest ways to invest in gold. Gold coins are usually more expensive; when it comes to the content of gold compared to bars. This is because gold coins are more expensive to manufacture. One benefit of gold coins over gold bars is gold coins tend to build more numismatic value over time. The reason for this is most gold coins are struck with a date on it. The older the coin usually the more numismatic value it will build, once it is kept in good condition.

Another benefit of buying gold coins is its ability to preserve your wealth from inflation or any other economic downturn a nation might face. Gold coins and gold bars have intrinsic value. This means unlike a stock in a company it will not become worthless over night because of human action. Gold coins are known to preserve wealth even when the organization that struck it ceases to exist. Some examples of this are the Roman Empire and the Byzantine Empire (Eastern Roman Empire). Gold coins do not rust or tarnish, so once it is not damage or scratched it will retain and usually build more value over time.

One last benefit of buying gold coins is its ease to liquidate. Gold coins are one of the easiest assets to sell. Most investors that invest in gold are likely to buy coins because of its ability to accumulate numismatic value over time. Another reason why gold coins are easy to liquidate is gold coins and gold bars usually have a uniform weight and purity stated on it. If an investor is not familiar with a coin, they can look at it and know how much gold and what purity they are buying. Investing in gold coins has its benefits; some of the benefits are hard to find in other investments. This is what makes gold coins one of the best investments out there.

Skyrocketing demand for safe-haven assets like gold have caused large-scale migrations away from riskier assets like stocks by investors looking to protect their hard-earned wealth with the best gold investment possible. This comes as no surprise, especially since the metal has proven its ability to thrive time and time during troubling economic scenarios. Gold’s value has increased more than 400% in the past decade, thus investors continue flocking to this historically powerful safe-haven tool.

Finding the best gold investment that suits your investing goals perfectly should be your main goal when purchasing bars and coins, and the first step that you want to take is fully analyzing your portfolio in order to fully understand what products could be best for you. If you seek true security with your gold investment, don’t settle for anything less than physical possession bars and coins for inside or outside retirement accounts. Gold stocks and Exchange Traded Funds hold several weaknesses that make them just as risky as traditional stocks, bonds and real estate.

The physical gold investment market can be separated into two distinct categories; modern bullion products and certified rare coins. Modern bullion products like the American Eagle coins and Johnson Matthey bars are useful for short-term profit because they hold very low premiums above the spot price of gold, usually around 5%-7%. Certified rare coins like the $20 Saint Gaudens and $20 Lady Liberties are useful for long-term wealth preservation because their numismatic attributes helps them maintain value over the years while at the same time increasing in value when the spot price increases.

Research is key to finding the best gold investment, and that’s why many wise investors turn to large nationwide precious metal dealers like the Certified Gold Exchange that assists investors with every aspect of their diversification. If you seek success with precious metals, request your free “Insider’s Guide To Gold Investing” by visiting https://www.certifiedgoldexchange.com/goldrequest/article/Best-Gold-Investment

One of the best ways to overcome an inflationary environment is to invest heavily in valuable resources. That is because a natural resource such as gold will not lose it intrinsic value. Everywhere you go on this planet, gold will always command good prices. That is why investing in gold stocks could shield you from a financial meltdown caused by overflowing money supply or hyperinflation. So as long as your dollars still have some value, it would be best to invest them in gold so that your personal wealth will not erode.

Before paper money or currency has been invented, gold is a standard medium to facilitate exchange of goods and services. In ancient times, the amount of gold hoarded by kings reflected the economic power of kingdoms. During the mercantile stage of capitalism, entire continents have been conquered to increase the gold reserves of empires. During the Industrial Revolution, finance capital emerged as the dominant factor in driving economies. Nation states therefore created currencies to facilitate trade and commerce. However, these currencies were still backed by the amount of gold reserves of a nation state. In effect, gold still defined the wealth of nations during those times.

In late 20th century, the United States removed gold as the standard reserve of its currency. The U.S. government therefore can produce paper dollars even without the backing of gold. This gave the federal government much power to increase the money supply in the economy. Printing of fiat dollars therefore became the norm as the money supply in the real economy accelerated because the financial discipline imposed by gold was absent. The irresponsible overflow of fiat dollars in the real economy resulted to inflationary turmoil which is being felt today. Today, if you have 1 million dollar savings, the real value of your money would be significantly lower. Moreover, the intensification of printing fiat dollars could wipe out your savings when hyperinflation hits the economy.

But if you have heavy investments in gold stocks, your personal wealth will be secured. Gold is a perpetual valuable resource. Its market value is influenced only by inflation but it will always be true to its real value. So if you have 1 million dollar investments in gold stocks, your savings will not erode. In fact, it could only increase as the demand for gold continues to surge. That is why every practical minded Americans should turn their sights on gold stocks investing. Investing in this sector could shield your money from the debilitating impact of inflation and hyperinflation. Investing in gold will also ensure that your lifetime savings will not be eroded by recessionary inflation. This way, you can weather the recession without feeling its impact.

There is still a way out of the mess created by the overflowing money supply. The situation may be bleak due to the prospects of hyperinflation. However, if you act now and invest in gold stock, your personal wealth and lifetime savings will be secured from economic collapse once hyperinflation renders the U.S. dollar worthless.

Gold is back in the spot light as it flirts with the $1000 per ounce level. This closely watched commodity looks as thought it will rocket higher because of the multiple trading time frames indicating breakouts. I mainly focus is on trading the daily chart but I always refer back to the longer time frames which are the weekly and monthly charts. Knowing the momentum and trend on these long term trading charts allow me to identify the strength of the rallies and sell offs on the daily chart. I use this analysis for determining how large of a position to take, and where to place profit targets and stop loss levels.

Trading gold stocks does provide explosive opportunities when the price of gold moves. The past couple years I have only been focusing on trading gold to the long side because the overall long term trend is up. Trading with the longer term trend always improves the odds of winning the trade. I will short GLD or GDX funds for an intraday trade using my simple Kitco gold overlay Day Trading Strategy. I have posted this strategy a couple of times on the internet, if you want to read more about it.

Below is my analysis explaining the price action of gold stocks on the daily, weekly and monthly charts. I also a listed the US and Canadian funds which I trade.

HUI Gold Stocks Index – Daily Chart – Short Term

The daily chart of the HUI clearly shows buy and sell signals, which were generated in the past 2 months. Using resistance trend lines for breakout levels is very important. I also use pivot lows to draw and connect my support trend lines, which allow me to calculate down side risk and buy signals. The recent breakout is very strong and that is because the weekly and monthly charts are showing a breakout to the upside triggering longer term traders/investors to buy.

Daily chart buy and sell signals are for short term trades which last between 2-20 trading days. My focus is to lock in 1-5% gains but in a strong trend I can pocket 10-20% return in a short period of time.

HUI Gold Stocks Index – Weekly Chart – Intermediate Term

Weekly chart patterns and breakouts provide a much larger move in general so watching this chart is crucial for long term success. Following the weekly chart goes for trading every investment vehicle whether you are trading stocks, futures, FOREX etc…

This chart generated a buy signal in December of 2008, which we took advantage of. And just 2 weeks ago it gave us another buy signal. Again using my simple trading strategy which involves trend lines and the MACD momentum indicator, we are able to establish clear buy and sell signals.

HUI Gold Stocks Index – Monthly Chart – Long Term

Long term investors will use the monthly chart for timing their buy and sell signals because once the momentum has shifted direction it tends to last for several months if not years. I do not focus on trading these long term signals but I use them to help me know the momentum (power) of the next possible breakout. This also helps me in deciding whether to scale out on rallies with some of my position locking in some profit and buying back on dips, while leaving a core position incase the price continues to rally.

The monthly chart of the HUI shows a breakout this month and if the price can hold until Oct we will have a complete long term buy signal. I use the MACD for momentum and the HUI:GLD ratio to confirm the breakout which puts the odds more in my favor.

Precious Metals Funds for Trading Gold and Silver Moves – Daily Chart

Here is a list of the precious metals funds I trade on a regular basis. I trade both US and Canadian funds. Because I am based in Canada I focus on Canadian gold stocks and gold funds when there are intermediate/long term signals which I trade in my retirement account.

The funds I trade are GLD (gold bullion), GDX (gold miner stocks), SLV (Silver Bullion), XGD.TO (Canadian Gold Stocks), CEF/A.TO (Canadian Gold & Silver Bullion). If you look at a comparison chart you will see some funds provide much larger moves than others. In general I like to own a bullion fund and a precious metal stock fund so that I get the best of both worlds.

My Gold Stocks Newsletter Trading Conclusion:

In short, Gold and gold stocks are on fire. The next 13 trading days are very important for gold as it battles to breakout above the $1000 – $1033 level which is the 2008 high. With gold trading at this MAJOR resistance level also known as a “Pivot Point”, the risk level is higher for traders. The odds are pointing to higher prices but we must recognize that price action becomes volatile and fast moving. We could see the price breakout and rally to the $1500 level within months which is what are currently positioned for. But we must realize that gold could create a double top and sell off very quickly which is why we have stops in place to protect us.

So those of you who are long be sure to lock in some profit and be ready for some wild price action in the coming weeks.