Gold's demise is exaggerated to say the least, and there are still some great opportunities while skeptics sit on the sidelines and complain, write Pam and Mary Anne Aden of The Aden Forecast.
The decline in gold snowballed on profit taking and stop-loss orders. Nevertheless, the damage was insignificant. Gold remains very strong above $1,695, and it’s bullish above $1,575.
Gold has been rising in an uptrend since late last year, and it has room to rise further. For now, if gold can rise and stay above $1,740, a strong renewed rise will be in force, signaling that the recent sharp decline was a temporary interruption.
Gold started strongly outperforming gold shares last year, and the ratio comparing gold to gold shares is now at the level it reached during the heat of the 2008 crisis.
Back then, it was all about saving the financial system. Today it’s about saving countries. This ongoing debt crisis practically guarantees a higher gold price for the next few years.
Gold shares look like they are not only bottoming compared to gold, but they also look good on their own. They had a disappointing year last year, but they too look poised to rise.
On the upside, if gold reaches record highs near $1,900, the market would be super strong and a takeoff type of rise would be underway. This is something to keep in mind, especially with geopolitical tensions growing.
So barring any jolt to the system, don’t be surprised to see gold move within its $1,560 and $1,900 level for a few months. A break out of this area will clearly point the way for the next move.
Continue to buy and hold gold. In particular, we like Central Fund of Canada (CEF), SPDR Gold Trust (GLD), and iShares Gold Trust (IAU).
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