Here is what I see as fundamental reasons for a bullish perspective for metals, especially gold:
- Currently, the United States fiscal policies are firmly intact
- Gold has been going through one of its longest consolidation periods in recent memory
- Current U.S. debt is about to exceed $16 Trillion (source: www.usdebtclock.org), and shows no indication of slowing
- Two rounds of Quantantive Easing (QE) have been introduced (and a third one is possible), combined with even more Treasury Bill purchasing, results in the creation of money from thin air
In my opinion, these are all very bullish indicators for Gold. Of course you will have day-to-day volatility, but I like to look at these markets from a long term perspective.
Now, let’s look at these markets from a Technical Perspective.
I have displayed longer time frames to give us a better perspective of direction from a technical stand point. As you can see with the daily chart, we have a pennant formation. Depicted in the second chart below is a longer time period, where I see a large scale bull flag.
From a technical perspective, this market has ALWAYS been, in my opinion, much more difficult to predict as it can have very large, adverse market movements. I believe it’s even more important to trade this particular market from a longer time frame instead of shorter time frames. From what I can see, we have a couple things happening that lead us to believe that we will see higher prices. We have an ascending triangle on the daily chart; and on the weekly chart, we have a massive bull flag set-up.
We know day-to-day volatility and predictability will be tough. However, if you understand the futures markets, leverage and how to properly position yourself in the markets, you shouldn’t have any problems. Once again, it’s a good idea to reach out to a professional broker who can help with ideas on how to properly manage your metals exposure within your investment portfolio. Always remember that every client’s circumstances are different, therefore what works for one may not work for another.
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