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Does the gold price still have to go to hell-and-back before it shoots very much higher?

 -- Published: Sunday, 7 June 2015 | Print  | Disqus 

By Peter Cooper

Does the gold price still have to go to hell-and-back before it shoots very much higher? That’s certainly the opinion of many professional technical analysts and followers of the Elliott Wave theory.

Elliott Wave theorists can point to some impressive past predictions. Then again they’ve had some real howlers. Remember the 2010 prediction of a huge crash in stocks (click here)? It never happened.

Price bottom?

So when these guys confidently assert that gold ‘must’ still drop to $900 or at least below $1,000 before it can enter a new bull market, who are we to believe? At least a savvy investor like Jim Rogers says he thinks this may happen but he’s already holding a lot of gold just in case of being wrong, again.

Surely with this sort of investment dilemma you first measure the potential downside and then consider the potential upside. This is called risk analysis. If the downside is small and the upside massive – as the bulls say it is for gold – then you don’t hang about trying to call the bottom of the market. You stay invested.

Better still you look around for undervalued assets in this sector and acquire them on the cheap while all the technicians are busy prognosticating.

That’s perhaps why veteran contrarian Marc Faber – who’s many bad calls since the global financial crisis have turned him into the classic figure of fun whose wisdom will be only acknowledged much later – says the junior gold mining sector is the only one in the stock market worth buying now (click here).

Bond crash

A goldbug in Dubai tells us that this time gold will go up in price during a financial crisis and not be crushed like in 2008-9. That’s because the bond as well as equity markets will be under pressure at the same time and gold is the natural safe have asset. It’s another nice theory, so which do you buy into?

Well if you think Marc Faber has got it right then you don’t need to risk very much of your portfolio to make a fortune in the next few years as junior gold mining shares are very cheap. It’s rare that such opportunities exist in any markets, and of course very few people are ever smart enough to take them.

You could also take the view of ArabianMoney that we will indeed see the Elliott Wave theorists proven correct, but it will happen so fast and the rebound be so dramatic that it will be quickly forgotten.

The risk then is not taking the risk now, for you will surely otherwise miss this opportunity and kick yourself many times in the future when we remind you about it.


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 -- Published: Sunday, 7 June 2015 | E-Mail  | Print  | Source:

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