When Will Be the Time to Buy Gold?

07/15/2013 8:30 am EST

Focus: COMMODITIES

John Person

Founder and President, John Person, Inc.

Seasonal expert and trader John Person shares his outlook on gold, and he thinks there will be a good buying opportunity in coming months.

John, what’s going on with gold? Went up, went down, went up a little bit, went down.

Well, actually gold’s had quite the reversal that people didn’t see, since the beginning of the year, in February. It was actually the worst time of the year to actually be holding long gold according to our work with the seasonal analysis in the Commodity Trader’s Almanac.

The best time of the year—and I think this will be good news for investors or those that were looking to get into gold—I’m still longer term bullish gold, but I’m looking by late June, early July, as the best time of the year to buy gold, and our price targets, we believe it’s going to hit back into that $1,325 to $1,275 range.

If it happens in that price range, and of course if it’s in late June, early July, that’s going to be the best time to stock up on gold, either the Spyder Gold Trust (GLD) or I think S&P Gold Miners ETF (GDX).

You can start looking at some gold mining shares, which typically have a lag of about 30 days after gold bottoms during that July time period. So investors can start looking at stocks in the gold mining sector in mid to late August.

Now what do you think long-term? And by long-term, of course, in the investment business, it’s not so long anymore, a couple of years. Do you have a massive target on gold? Somebody told me in February at the MoneyShow a target of $2,400.

Well, it’s funny you mentioned that, because here at the MoneyShow, we’re staying in the hotel, and I’m in the elevator and I don’t know who this gentleman was, he says "So what’s your opinion on gold?"

I gave him the same outlook—this was just last night—and he says "OK, so I can buy at $1,325 or so, but then where do you think it will be?" I go, well, give me a timeframe, what’s your outlook? He goes give me a one year and a two year. I said, well I think by next year you’ll probably see gold back at least to $1,800, and my two-year target, believe it or not, would be around $2,200.

That’s interesting. Well, you know who told me? It was one of the Aden sisters.

Well, there you go.

Yeah, they’re pretty knowledgeable. So are you out of gold totally now?

Well, I’m more of a short-term and swing trader, and right now I’m still taking the short side of the gold trade. I’ve been advising people to be selling rallies in gold.

First off, this liquidation is what I call it, people getting out of the fear markets, and gold had a strong appeal to those that were scared of the stock market in 2012, and so that’s why we saw that big run-up in 2011 and 2012, and in bonds as well. So people were afraid of what was going on.

We’re seeing people come out of those assets a little bit, except for Ben Bernanke buying bonds, of course. I do believe that with this massive influx of liquidity from central bankers on a global scale, it will have ramifications, and there is going to be a solid need for gold. Therefore, I am longer term bullish.

I think right now, though, in this liquidation we’ve seen money coming out of gold into momentum movers, which has been the stock market; that’s where the momentum has been. People are liquidating or shedding some of their long holdings.

It’s been on some significant volume, so the volume analysis, the seasonal analysis, and some of the other proprietary technical tools that we use suggest that we still have a little ways to go in gold.

Related Reading:
Capitulation in the Gold Market
How to Play the Bottom in Gold
Is This the Bottom for Silver and Gold

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