What is Happening to the Gold price?

What is going on with the gold price?

First of all we need to distinguish: which gold price?

You usually only hear about the US dollar gold price. It’s quoted in all the finance news bulletins. But if you’re an Aussie investor, it’s not entirely relevant. Sure it’s important, but it’s not the main thing you should be looking at.

I’m talking about gold priced in Australian dollars. This adjusts the widely quoted US dollar gold price for movements in the Aussie dollar. And thanks to a falling dollar over the past few years, Aussie dollar gold has done quite well.

In fact, in the past few days, Aussie dollar gold broke out to a new three year high. You can see this in the chart below. This is a bullish long term development and suggests higher prices in the months and years to come.

Confirming this view, many Aussie gold stocks are also reaching new share price highs, with some already up hundreds of percent from their low points.

Aussie gold stocks

Source: Bigcharts

What now for gold?

Gold, in both US dollar and Aussie dollar terms, has had a good run over the past few weeks. These sort of rallies are generally followed by some profit taking. So expect a correction in the next few days or weeks.

But fundamentally the picture looks good. An increase in risk aversion across the globe, and falling global bank stocks mean gold should continue to see money flow in for safe haven refuge. If the charts continue to support this bullish fundamental view, then the long term bear market for gold could be coming to an end.

Never assess a stock or assets fundamentals without looking at the chart too. Combining fundamental analysis with charting can yield powerful results.

If you’d like to know more, click here.

Greg Canavan
Editor, Markets and Money

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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:

 


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