Gold Break Out or Gold Head Fake?
Since 2011 Gold has been squeezed in a wedge where the upward and downward slope have been almost equal. Support has been rising and resistance falling at almost the exact same rate. And, it has been in formation for six years! So the question is this a gold break out or a gold head fake?
The gold price has been compressed to the point where it is forced to go one way or the other. And, it has pierced resistance to the upside – now with clear skies above.
What is next? Certainly, there is a strong case that gold will go back to test its highs at $1,900. It won’t be a straight line – and it will most probably climb a wall of worry to get there, throwing many off along the way, but that’s eventually where its headed. The train has left the station just like back in the years 2006 and 2007.
Back then, the corrections along the way (see chart above) left many casualties and kicked many unbelievers and those that were faint of heart to the curb. It will do exactly the same again, possibly with even more vengeance and volatility. But those who hold on (and it may take a couple of years) will eventually see $1900, possibly $2500, or even more. Stamina and sustenance will be required, but the long-term benefit and gain will be the reward.
And it’s not just the hope of profit to be gained by owning physical gold – it is all of the other benefits that come with physical gold ownership:
- Insurance – You are insuring against any form of financial calamity – banking crisis, fiat currency demise, central bank policies, the move toward cashless society (and unbridled tracking of the financial affairs of individuals.)
- Confidentiality – Remember, there is no social security number on the precious metals you purchase.
- Transportability – (100) 1 oz gold coins worth $130,000 fits in 5 tubes the size of a disposable salt shaker, and could easily be carried in a couple of pockets or a purse.
- Acceptability – Mainstream gold coins and bars are excepted anywhere in the world, 24 hours a day. Any country anywhere has a market in gold – 24/7.
- Wealth Transfer – It can legally be passed in an estate outside the legal system.
- Safe Haven – International geopolitical concerns drive investors in to gold. North Korea is chief amongst them, and gold will serve as a safe haven amidst geopolitical risks.
Remember, physical precious metals should be a 5-20% allocation in your portfolio, depending on your personal financial philosophy. For some, 5% is more than enough. For others, 20% may be justifiable. Just be balanced in your approach and percentage allocations.
If you have been waiting for a point to enter the precious metals market, or have wanted to add, your opportunity is now.
If you have any questions regarding the precious metals market, we will be happy to have a one-on-one discussion with you at no obligation.
Quote of the Day: Paraphrasing Churchill, “Central banks will do what is right, after they have exhausted all other alternatives.”
