Over the past few weeks the price of gold has been rising steadily, which is great news for the gold price consolidating as the RSI does not fully penetrate into oversold territory. The current trend, as I see it, is the price will consolidate at the new all time high and then continue on its upward path towards all time highs, which will continue through the end of this year.
I remember when I first heard about the rise in gold prices back in the early 1990’s. Back then gold was trading under $20 a Troy ounce and that was quite an expensive price then. Back then people had some trouble understanding what was going on but now we all understand how the market works.
When the market first went into an oversold state, everyone thought the problem was temporary. Investors were expecting the current rally to go on forever so they sold the dips and bought the rallies hoping for a fast recovery. That never came and the investors lost their investments.
Once that rally started to slow down some investors started to worry that the market was going to be oversold and to start selling. That did not happen and investors were forced to take the losses. People were reluctant to sell because they were holding on to the hope that the market would bounce back in a short period of time.
Then the market did bounce back and as it did many of the bullish investors got back in and let the market come back down. It has been over 20 years since the market took a nose dive and no one wants to see the market go back there again. So, as the market consolidates the people who are long term bullish on gold will lose out. That means people like me who are long term bearish will win as the price consolidates and that is a good thing.
So how do we make the most out of the price consolidation and keep the market going higher? Well, as I said I think the price will consolidate and that means people will have more money to put into the market and it will take the price even higher. The silver dollar is just one of the silver derivatives I look at because it has good buying potential and historically it has been a good way to get into the market at a low price.
Another way to be long term bearish on gold is to look at the gold coins. I actually own a bunch of gold coins that are in excellent condition and I am waiting for the price to consolidate before I sell them. My long term bullish analysis on gold says the price will consolidate as we move into spring and fall months and it should stay low for the next few months.
I think the market will come back down with the winter market still on the upside. The market is having a great run at the moment and as that continues, the price of gold will get even stronger and it will be more attractive. The big question that I have is when will the market turn around and stop buying and selling.
I am pretty confident that the market will not go lower as long as the uptrend is still intact. I think the market will continue to support gold and will consolidate further as we move into spring and fall months. The only thing that could hold back the market from consolidating is the Fed and the subsequent paper currency crash that they will bring on.
We are now past the point where we can wait for the price to consolidate and that means that when it consolidates, it will move higher than it ever has. The price of gold is simply too valuable and that is why it is undervalued. I have written an entire book about the reasons why gold is an excellent investment and the history of how it has gone up 1000% since it was first created.
If you really want to learn the secrets behind the current bull market, then you need to find a good book that goes into much more detail about why the price of gold is so undervalued. and you need to learn how to pick individual stocks that you believe will gain on the strength of the rally, how to use leverage and what the best strategies are for getting the most out of your investment.