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Tuesday, September 11, 2012
The bull market in gold is 100% back.
Wait, how do we know? What does a bull market in gold look like? And even better... how much money can we make?
Let me answer those questions for you today...
From 2000 to 2011, gold was in an incredible bull market. But after rising for 11 straight years, gold peaked at around $1,900 an ounce in August 2011.
It then fell to around $1,600. And for the last 11 months, gold has been downright boring, drifting around $1,600 an ounce.
But that has changed... Two weeks ago, the Fed essentially told us that it's willing to print more money when needed. This causes the price of gold to rise... You see, when there are more dollars out there, and the same amount of gold, it takes more dollars to buy an ounce of gold.
And gold is finally going up again! It's in an uptrend.
The simplest, most common measure analysts use to gauge when an investment is in a new uptrend is the "200-day moving average."
When a stock (or any other asset) is trading above its average price for the last 200 days, it's in an uptrend.
For the first time since March, gold has risen above its 200-day moving average. So gold is now "officially" in an uptrend. It has been in an uptrend for a couple weeks now, and it appears solid.
Why is an uptrend so significant?
Uptrends are where you make the big money...
Since late 1971, gold has increased at a compound annual rate of 9% a year. But when gold is in an uptrend (when it's trading above the moving average), your wealth compounds at 18% a year.
If you're interested in the actual numbers... we used month-end data instead of daily data to measure this uptrend. This significantly helps limit "false" signals. And we used 10-month moving average as opposed to a 200-day moving average (10 months have roughly 200 business days).
Interestingly, there is nothing magical about the 200-day or 10-month period – the results were similar for eight-month, nine-month, and 11-month moving averages.
Generally, your wealth compounds at about 18% a year (or more) when you own gold when it's above the moving average. That's incredible.
The chart below shows what I mean...
You're "in" the trade when it's green and "out" when it's red. By using this system, you are a little late to get in and a little late to get out. And you'll get an occasional false signal. But generally, it's a pretty darn profitable – and simple – system.
Today, gold is above its 200-day moving average for the first time since March. It has stayed above its moving average for weeks. In short, it appears the gold bull market is back...
This is good news... Going back over 40 years, your wealth compounded at about 18% a year when gold was in a bull market.
If you've been looking for the right time to get back into gold – or add to your position – now is that time...
Gold is in a bull market again. You want to own it now.
In April, Brett Eversole told readers the spring downtrend in gold would reverse. "The fundamental picture for gold has not changed," he wrote. "And based on history, we can expect to see a new high in gold prices in 12 months or less." See what had him so sure – and why he's convinced gold will continue to soar – here.
If you missed the initial gold breakout, don't worry... Resource expert Matt Badiali says you don't need to catch the start of a big bull market in gold to profit. You just need to look in the right place... Even if the gold rally falters, you can reap the rewards from one of Matt's favorite sectors. "And if the rally continues," he says, "the rewards will be that much bigger." Learn more here: The Secret to Making a Great Gold Investment Today.
THE GOLD BULL TRADE IS BACK
It's official... Gold is back in "bull mode."
Gold has spent much of the past several months waffling back and forth in a relatively tight trading range – storing up energy for its next big move. After last week's explosive 3% rally, that next move is higher…
Gold has broken out to the upside of its consolidating-triangle pattern. The metal should now be on its way to new all-time highs within the next several months.
It's a little overbought right here in the short term, and it's due for a bit of a pullback. But with gold in "bull mode," any pullbacks are buying opportunities.
– Jeff Clark
In The Daily Crux