In 2002, Profit Confidential began warning readers to get back into gold-related investments, specifically gold stocks. “I’ve been pushing gold bullion and gold shares for over a year now. Back in January 2002, I personally started buying gold shares,” Michael Lombardi said on December 13, 2002.
This gold stocks guidance and analysis proved to be extremely timely. Gold bullion was trading at under $300.00 an ounce when Michael first started recommending gold-related investments. Many gold stocks recommended in Michael’s advisories gained in excess of 100%!
Back in 2002, Profit Confidential started offering gold stocks analysis to our readers, and continues to do so today. And, we have been recognized as one of the first investment letters advising its audience to jump into gold stocks, very early on in the gold bull market. The analysis we provided resulted in many gold stocks rising 100% or more in very short periods of time.
Profit Confidential has also been ahead of the investing curve by successfully advising readers to dump certain stocks, and to put the proceeds into gold-related stocks.
In the June 2, 2005 issue of Profit Confidential, Michael noted, “Most investors in Google, surprisingly, are retail investors. And, that’s why the stock can go higher—because only 20% of the stock is owned by institutions. If the institutions jump in and buy Google, the stocks will certainly move higher.”
Michael recommended Google as a buy when it was trading at $288.00 per share. On November 5, 2007, when Google reached $700.00 per share, he advised readers to sell their Google stock and put the proceeds into gold-related investments. Coincidently, gold bullion was also trading at around $700.00 per ounce. Michael’s message was to trade each $700.00 share of Google into $700.00 of gold-related stocks because he saw gold as a much better investment.
He was right. Since then, Google has struggled to break through the $700.00 per share level. Gold, on the other hand, touched $1,923 per ounce on September 6, and continues to trade above $1,700 per ounce.
And, gold stocks are expected to continue to shine. Gold has experienced 12 consecutive years of sequential growth. The recent weakness in gold bullion prices (more like a correction in an ongoing bull market) is a tremendous opportunity for smart investors.
The overarching driver of the price of gold will continue to be linked to the global financial crisis, and ongoing tensions in the Middle East. As a result, gold is expected to rise every quarter next year and average $1,925 an ounce in the final three months. Some analysts believe gold will rise above $2,200 an ounce. (Source: Larkin, N., and Roy, D., “Soros bets big on gold as prices expected to hit record highs,” Investing November 20, 2012.)
Today, you can regularly find our economic analysis of gold and gold stocks in Profit Confidential. Each time gold prices moved higher, we told our readers to buy more gold-related investments. See what we have to say about gold’s future rally in Profit Confidential.
Back in late 2011, I created a widely circulated video that included six predictions. I hit it on the head with five of those predictions. But the winners are not what are important to my readers today; it’s the prediction I didn’t get right that’s vital now
Back then, I said the U.S. dollar was “dead” and wouldn’t go anywhere. I pointed out that if it were not for the continued crisis in the eurozone, the greenback would fall flat on its face. The dollar hasn’t gone anywhere since. And if it were not for investors taking their money out of European banks and moving them into U.S. dollars, our dollar could have collapsed.
My second prediction back then was that the euro would decline in value. And it has. Prediction three was that both interest rates and inflation would rise. The yield on the 10-year U.S. Treasury has risen about 50% since then. As for inflation, if we calculate it the way the Consumer Price Index (CPI) was calculated when Jimmy Carter was president, it would be almost three times the rate the government tells us it is today.
I compared the rally in stocks that started in 2009 to the period following the 1929 stock market crash (1934 to 1937) and warned that stock prices would eventually follow the same fate they did after the “fake” stock market rally that followed the 1929 crash. I still have that opinion today.
As many of you know, I’m not keen on the near-term prospects for gold at this juncture. The metal, while still viewed as a safe haven for some, is no longer on my buy list.
Yes, central banks are buying gold, but so what? The supply of the yellow ore continues to be ample, and demand really doesn’t appear to be doing anything.
In mid-April, I was bearish on gold when it traded at around $1,480–$1,500 an ounce. (Read “Is Gold’s Near-Death Crisis Over-Exaggerated? Concerns of a Market Meltdown May Not Be.”) And here we are two months later and the spot price is down 6.5%, while the S&P 500 has gone up about 3.7% during the same time.
Now I’m not saying that I would never be a buyer; I just wouldn’t be buying at this time, due to tough resistance and selling on upside moves, based on my technical analysis.
Take a look at the chart below. The first thing you’ll notice is the presence of a firm bearish “death cross” since late February, when the 50-day moving average (as shown by the blue line) crossed below the 200-day moving average (as reflected by the red line). Since the initial move, the gap between the two moving averages has widened and gold prices are trending lower.
Chart courtesy of www.StockCharts.com
The next developments you will notice on the chart above are the two successive descending triangles characterized by lower subsequent highs.
The first descending triangle materialized between early February and early April, prior to gold tanking on the chart, falling below $1,350. We are now in … Read More
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