Good Time or Bad Time To Buy Gold? → Washingtons Blog
Good Time or Bad Time To Buy Gold? - Washingtons Blog

Tuesday, March 10, 2009

Good Time or Bad Time To Buy Gold?

Whenever the price of gold tanks, goldbug investment advisors say that it's the perfect time to stock up on cheap gold.

On other other hand, well-known chartists such as the Aden Forecast say to stay out of the market, as the bull market trend might be reversing, with a long-term (secular) bear market in gold setting in.

Who's right?

Well, Mark Hulbert says its a good time to buy because goldbug investor sentiment has turned bearish. In other words, he says that if traditional goldbugs are staying out of the market, so it's time to get in.

And the head of China's energy bureau said in comments published on Monday "China should use part of its nearly $2 trillion in foreign exchange reserves to buy more gold, oil, uranium and other strategic commodities".

Hedge funds are pouring into gold, and banks may pour their money into commodities as well, which could create a rally in gold prices. See this.

Wealthy individual investors are also buying gold as a safe haven asset.

And many credible people are saying that the economic crisis could cause widespread unrest. Unrest drives the price of gold up.

Finally, Elliot Wave chartists say this is the last bear market rally for the stock market for years to come (and see this). Since they think the stock market will tank all the way down to 5,000 or less as soon as this last dead cat bounce rally ends, money might pour out of stocks and back into gold in the near future.

So is now the time to buy gold?

Well, it depends how long this bear market rally in stocks will continue. Market timing is hard, but you should obviously wait to buy until the price of gold is at its lowest.

But the long-term outlook for gold is likely bullish. See this.

For an opposing view, see this.

Note: I am not an investment advisor and this should not be taken as investment advice.

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