China and India: Gold Buying Bullish
Wednesday, December 14th, 2011
By George Leong, B.Comm. for Profit Confidential
Gold prices are currently under some pressure following a decline below $1,700, but I view weakness in the precious metal not as a sign to sell, but as an opportunity to buy.
The fact that gold is losing momentum at this time despite what I feel will be some tough years ahead for the European Union and eurozone along with the debt mess here is a surprise. But when the metal has increased as much as it has, there will always be those who believe that the price will retrench back to some medium-term support at around $1,600.
The price chart of cash gold appears to suggest a possible retest at $1,600. Since September, the trendline has been down. The metal has peaked on three successive moves, but each upward move was lower than the prior upward move: $1,925 (September); $1,800 (November); and $1,760 (December). Failure to hold at $1,600 could see the metal decline to below $1,500, as was the case in early July 2011. This is the current monetary risk.
But, as we move ahead, I continue to be bullish. As I recently said in a commentary, the metal may be set to move back towards $2,000 in 2012 if Europe falters and China stalls. Michael Purves, chief market strategist at BGC Partners, believes that gold stocks on price weakness, with a break below $1,600 representing a great opportunity to buy.
If you want to read more on why gold is a favorite, read Mining for Riches: Great Metals Stocks to Check Out.
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Tags: china, european union, eurozone, gold, gold bull market, precious metals
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George is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. His trading advice on stocks and options is also found on his daily trading site, Daily Profits. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services.



