In the world of trading, gold is one of those special markets that seems to defy the laws of physics.
That all changed last week.
After skyrocketing to over 1,030 dollars an ounce, goldseemed to discover gravity, and plummeted over $125 in just a few days.
So, the question is, has the bubble in gold burst?
See how we address this question, and how we trade gold, in this short video. See if it makes sense to you.
No registration is required.
Here's to your future success.
7 thoughts on “See if this makes sense to you.”
I keep seeing people saying that the fundamentals don't support the kinds of prices we've been seeing in commodities. Well if you're only looking at supply and demand of gold, for instance, this is true. But this isn't about the supply of gold, silver, oil, wheat, etc. The big drop in gold we saw may have been caused mostly by a big selloff, but as you can see from the fact that it has already broken out above the price it was at a month ago, the influence of traders on the prices is relatively thin and short-lived. The conventional thinking only brings to light the secondary forces at play here, and the primary driving force is not so much the supply of gold as it is the supply of dollars. IOW, there hasn't been as much of an increase in commodity prices as there has been a rapid devaluing of the dollar. It's not that gold has gone up, but the dollar has gone down.
With the massive amounts of money that are being injected by the Fed, it would be quite strange if prices didn't go up dramatically. If you don't think this is the case, go ahead and look at the 1 year gold spot chart( http://quotes.ino.com/chart/?s=FOREX_XAUUSDO&v=d12&w=1&t=l&a=50 ), and compare it to the 1 year dollar index chart ( http://quotes.ino.com/chart/?s=NYBOT_DX&v=d12&w=1&t=l&a=50 ). You will see that they are almost perfect mirror images of each other. Go ahead and generate a 1 year chart of the M2 money supply (the Fed no longer supplies the M3) and you will see a similar trend http://research.stlouisfed.org/fred2/fredgraph?s%5B1%5D%5Bid%5D=WM2NS .
Bubbles, like that we saw in the real estate market, are caused almost entirely by the actions of the buyers. In the current case of commodities, those actions are only responsible for the short term fluctuations. The underlying cause keeps getting ignored -- extreme inflation of the money supply, resulting in price inflation. We are only just beginning to see the consequences of the Fed's actions.
Having said all that, buying on the dips and selling on the spikes is a good idea, as long as you're looking at longer term trends.
Kurt gave you a good vision of investing! nothing is a sure thing all the time, but it can be extremely good sometime....that s the cycles.
i am a cycle trader (prop) and i can tell you that this is what works on a constant basis.
and thank you Mike too to bring some light to this triangle business : they dont understand gold, most people dont otherwise our dear FIAT system would not exist!....although i dotn give it much more time.
Hi Adam, Your giant footsteps will only work in strong trending markets and will give up all gains and probably more in range markets. It's fine showing trending markets and how they would make money for traders but taking long trades after a break of a 3 day high in an uptrend and closing trades below a 3 day low in a range market woudl chew up traders. Mike
I agree with you that looking only the triangles on a short term basis would break the bank and increase trade commission costs. By look at the chart analysis score you can identify stagnant markets and leave them alone to play with strong trending markets. The Smart Scan will allow you to search out strong movers. If you are looking at sideways moving markets on a very short term basis you should consider adding another technical analysis indicator to filter out some mis-triggered triangles.
There is NO one magic investment bullet. There is no investment that is so great that it is the ONLY thing one should purchase. Just ask all those people who piled into the housing markets in Florida and Las Vegas and are now having to deal with their property being foreclosed on.
Balance is the key...yes...real estate is good (I'm buying those foreclosed properties from the fools)...but commodities are also good....and stocks are just as good too.
Just understand that ALL markets or investments go through cycles...long term cycles. They always have and always will. The key is to never invest more than you are comfortable with and never make an investment in something you don't understand.
When currencies fall away to almost nothing, holding real assets gives you piece of mind
Commodity is where you will get the best return -- you just need sound fundamental economic background, not too much leverage if you are not a semi-pro trader.
Investing in the long run in equities will get you naked ! even quicker if you go through a so called expert ! believe me i have seen many people losing their shirts and their life follwing those experts!
Commodities are the best bet, just don t take more leverage than you can deal with and have strict risk management rules!
i think all comoditiy is the worst option for any trader as wel as investor. i will never invest in comodity and not advoice to invest any body of earth.
for investment 1: realestate all typewith proper team and planing as eiquity invest.
2. equity invesment .for long trum.in lover lable.
Comments are closed.