Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold About to Burst Out of Its Recent Trading Range

Commodities / Gold & Silver 2009 Mar 19, 2009 - 03:00 AM GMT

By: Money_and_Markets

Commodities

Best Financial Markets Analysis ArticleSean Brodrick writes: My friend Kevin just regaled me with a story about his trip to the mall — a guy was there handing out plastic bags for people to use to turn in their gold for cash. “Holy cow!” Kevin said. “It was like a mobile pawn shop.”

Kevin resisted the urge to run home, find his gold and sell it to the plastic-bagger at the mall. You see, Kevin is a smart cookie and knows a thing or two about gold. He's a buyer, not a seller, of gold coins.


Gold is approaching an inflection point that could be good for gold owners , like Kevin. And it could be good for gold traders , too! I want to tell you about that today.

And while I'm at it, I'm going to give you tips on how to sell your gold — if that's still what you want to do.

But first, why …

Gold is About to Break Out Of Its Recent Range

Let's look at a chart of gold as tracked by the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust (GLD) …

Gold's short-term downtrend is about to clash with its intermediate-term uptrend.

This daily chart shows that gold has been in an intermediate uptrend since November. But it peaked out last month and went into a short-term downtrend. The GLD is now below its 20-day moving average, which is a quick-and-dirty dividing line that can tell you if the trend is up or down.

Now we need to wait and see which way gold goes …

If the GLD bounces higher from this inflection point and goes up to break the short-term downtrend, great! You can buy the GLD or a fund like the PowerShares DB Gold Double Long ETN (DGP), which is meant to deliver twice the daily performance of the Deutsche Bank Liquid Commodity index — Optimum Yield Gold Excess Return, to ride that move higher.

On the other hand, if the GLD breaks the uptrend, you can go short with a fund like the PowerShares DB Gold Double Short ETN (DZZ). This ETF is designed to replicate twice the inverse of the daily performance of the Deutsche Bank Liquid Commodity index — Optimum Yield Gold Excess Return. In other words, for each 10 percent drop in the underlying gold index, the DZZ could jump 20 percent.

But a word of caution: Leveraged funds, like DGP and DZZ, aren't for buying and holding — they're for short-term trading. And losses can pile up twice as fast if the price of gold goes against you.

Of course, if gold does drop lower, you might simply consider that a chance to buy gold on the cheap.

Why is that? First, I have to give you some background …

Gold Collectors, Investors, and Speculators Buying Like Crazy …

The U.S. Mint has stopped producing its 2009 American Gold Eagle proof and uncirculated coin for collectors.
The U.S. Mint has stopped producing its 2009 American Gold Eagle proof and uncirculated coin for collectors.

Last week, the United States Mint officially announced the suspension of another slate of gold and silver products. The mint is suspending its 2009 American Gold and Silver Eagle proof and uncirculated coins produced for collectors. These collectible versions of the bullion coins represent a sizeable amount of precious metal sales to individuals.

The Mint is still making gold bullion coins, but quantities are limited.
And no wonder: The U.S. Mint sold four times as many American Gold Eagle coins in January 2009 as it did in the same month a year ago. This is following the trend established last year when sales of the Mint's one-ounce American Eagle gold bullion coins rocketed to 710,000 ounces, up from 140,000 ounces a year before!

And it's not just the U.S. Mint that has seen gold coin sales soar …

The Royal Canadian Mint, which produces Maple Leaf bullion coins, said it quadrupled its production capacity late last year as demand for gold and silver bullion products shot up.

Recently we saw the holdings of GLD, hit a record 1,056 metric tonnes on March 15. That's more than the gold held by the Swiss government! And other ETFs around the world are adding to their holdings as well.

Take a look at this one-year chart from Sharelynx.com …

Transparent Gold Holdings

This chart shows that the rise in ETF holdings of gold has been extraordinary in just one year — from 38 million ounces of gold to 60 million ounces of gold.

So why does this translate into a tremendous opportunity for you to buy gold?

Well, you have to remember that a big chunk of the money in gold-based ETFs is speculative money. Investors are using these funds to ride the rise in gold prices. If gold and the ETFs break their uptrends, we'll probably see speculators sell their holdings, which should drive the price of gold down rather quickly. And that, in turn, should push down the price of the American Gold Eagles that are on the market.

So if you've been looking for an opportunity to pick up American Gold Eagle coins on the cheap, this could be your best chance for years to come.

A pullback on gold prices to between $850 and $800 an ounce would not surprise me. Remember though, dealers are getting hefty premiums on bullion right now, so you'll have to figure that in your cost. Plus, if you're buying from a Web site, you'll have to add mailing costs.

So, would a break of this uptrend in gold prices worry me? Not much. I believe that a pullback is fine — a normal and necessary part of any bull market.

Take a look at this monthly chart of gold prices …

Gold has a long way to go before testing its monthly uptrend.

You can see that gold has a long way to go before testing its longer-term uptrends.

And if gold bounces and heads higher from here, you can pile in to the gold ETFs. Either way, you can win! Subscribers to my Red-Hot Commodity ETFs service are out of gold now. But I'll be sending them a flash alert the moment I see a breakout up or down.

Now, if You Still Want To Sell Your Physical Gold …

A friend of mine in the business can't keep Gold Eagles in stock. But he has plenty of inherited jewelry that's being turned in all the time, having outlived the lifespan of anyone who ever thought it was pretty.

Before you trade your gold jewelry for cash, there are three pointers you should follow.
Before you trade your gold jewelry for cash, there are three pointers you should follow.

And here are three pointers he told me that gold sellers need to know …

#1) The price you get varies widely.

* Independent buyers who sell directly to a refinery can pay the most — up to 70 percent of the melt (spot) price of gold.

Gold dealers will pay you about 50 percent of the melt price.

* Pawn shops will pay you the next level — a good one will pay 40 percent to 50 percent of the melt price.

In my experience, the firms that advertise on TV will pay you the least. The average is about 33 percent, or 33 cents on the dollar. I've even heard of people getting as little as 10 cents on the dollar!

And I'd wager that the guys who hand you a plastic bag in the mall and offer to buy your gold probably pay about the same as the TV pitchmen.

#2) You should know exactly how much gold you have. Some companies don't even tell you how they based the amount they give you! And if you don't know the weight, you have no idea what kind of a deal you're getting. But it's hard for people to know exactly how much gold they have since most gold jewelry is not 24 karat (pure) gold. That's because pure gold scratches and dents easily and is more expensive, so jewelers combine it with other metals.

For example, if you know you have 18 karat gold, that's 75 percent pure gold. If your 18 karat gold necklace weighs one ounce, and gold is trading at $900 an ounce, that's $900 x .75 or $675 worth of gold at the melt price. If someone says they're giving you 70 percent of the melt price, they should pay you $675 x .70 = $472.50.

The lesson here: Bring your own calculator and do your own math. If you have the time, have your gold jewelry appraised at more than one place and write down which pieces are 18 karat, 22 karat, 14 karat, etc, and their weights.

And when it comes to weights, here's something else you should understand: Gold is measured in troy ounces — 12 troy ounces to a troy pound. If you go to a jeweler, he might use pennyweights. There are 20 pennyweights in a troy ounce.

There are also 31.1 grams in an ounce of gold. Notice this is different from the grams you use in food. So if you have a food scale at home, it probably uses 28 grams per ounce.

It can be a bit confusing if you're not used to the system. So, it's best to have your gold weighed by a trusted source.

#3) Sell when prices are going up. You're likely to get the best deal from a buyer if he thinks he can sell your gold at a higher price.

These three simple tips should help you get the best price for your gold jewelry. But as far as investing goes, my suggestion is to be a buyer on pullbacks. And when it comes to trading, you can go long or short, since there's money to be made on either side.

Yours for trading profits,

Sean

P.S. For the latest on the tremendous, money-making opportunities available in the natural resource and commodities markets, sign up for our new free e-zine, Uncommon Wisdom , with daily updates and recommendations to preserve and grow your wealth. Click here to subscribe.

Also, my blog has moved. Remember to check it out at: http://blogs.moneyandmarkets.com/red-hot-energy-and-gold/ .

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules