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"Is This The Right Time To Get Into Gold?"

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Today’s AM fix was USD 1,245.25, EUR 915.29 and GBP 763.07 per ounce.
Yesterday’s AM fix was USD 1,241.75, EUR 913.12 and GBP 760.46 per ounce.

Yesterday the markets were closed in the U.S. for the Thanksgiving national holiday.
The closing fix in London was USD 1,245.50, EUR 915.54 and GBP 761.59 per ounce.

Gold continued its second day of gains in London, narrowing the largest monthly drop since June, as physical demand increased. Gold neared a 34-month low of $1,180.50/oz reached on June 28.


Gold in U.S. Dollars - 1 Week

There was more irregular price action in trading yesterday between 1800 and 1830 GMT. Gold had trended slightly higher in the afternoon and was trading at $1,244/oz prior to a sharp but very brief spike to $1,254/oz and then sharp concentrated selling saw gold fall by more than $20 to $1,231/oz.

The trading was unusual as foreign exchange markets saw no price movements of note, nor did the silver, platinum and palladium markets.

Contrary to frequent assertions, recent losses are unlikely to be due to the continual concerns of ‘tapering’. The U.S. Fed policy minutes released on November 20 suggested that an improving economy would warrant trimming debt purchases in the coming months. While U.S. economic data this week showed jobless claims unexpectedly decreased, the data has been mixed at best and the U.S. economy continues to struggle.

Buying from China, set to become the world's biggest buyer of gold this year by a long way, picked up this week as prices continued to be under pressure. On Thursday, traded volumes of 99.99 percent purity gold on the Shanghai Gold Exchange hit their highest in seven weeks and Chinese gold premiums closed at $26 with Shanghai gold closing at $1,267.82/oz.
 
Russian bank VTB said overnight that it has begun exporting gold and silver bullion to India to expand its business in the Asia Pacific region. Indian demand for gold remains very robust and is so strong this wedding season that the short supply is forcing families to melt down and recycle family heirlooms.

Momentum and technical traders are dominant at the moment and with the short term trend down, gold may incur further losses in the short term.

Despite the very poor sentiment after recent price falls, gold's fundamentals are actually quite sound.

Global physical demand is set to be very high again this year and may even reach a new record, despite the 25% price fall. This is especially the case, as Chinese demand is set to have new record this year despite the recent slight decline in demand. China’s net imports of gold from

Hong Kong alone in October reached the second-highest level on record last month. This does not include direct imports from Australia, Africa, Vietnam and other countries.
Indeed, Chinese demand this year looks set to be a new record for the highest gold demand from one country in one year ever. It is important to look at the aggregate annual demand figures rather than the ebb and flows of weekly and monthly data which can mislead.

Despite what is likely to prove short term weakness, the smart money is gradually accumulating on the dips. Dollar cost averaging remains prudent for buyers who wish to have an allocation to bullion but are concerned about further price falls.

"Is This The Right Time To Get Into Gold?"
Slow But Steady – Dollar Cost Averaging Remains Prudent
"Is this the right time to get into gold?" is a question we have been asked by clients and the public nearly every day for the last 10 years.

"Prices have gone up too much. I've missed the boat" was frequently how many of the public answered their own question. This was often the refrain, especially in the period from 2006 to 2010 when gold prices rose from $500/oz to $1,400/oz.

We first heard those concerns in late 2005 when gold prices rose to over $500/oz. One caller was adamant and said “I am not buying gold after its price has doubled in just 5 years”.


Gold in U.S. Dollars - 10 Years

More recently, the frequent refrain has been “prices are falling as the gold bubble has burst and gold is a bad investment.” And indeed, “I am not buying as gold prices are down 25% this year and 35% since the record high in August.”

These are understandable concerns. People do not want to lose their hard earned cash buying something that will fall in value.

However, there is a way that one can invest in or buy gold and sleep easy at night knowing that you do not have to be concerned about price falls. There are rarely free lunches in life, and that is particularly true when it comes to investing and saving.

However, there are two free lunches when it comes to investing. They are diversification or not having all your eggs in one basket and secondly a less well known but important strategy -
Dollar Cost Averaging (DCA).

Once you have learned about the power of dollar cost averaging you will be a better investor and a better gold investor and buyer.

Dollar-cost averaging or pound or euro cost averaging means putting the same amount of dollars, pounds or euros each month into an investment or asset, such as equities or gold. That is all it is.

Why put your hard earned cash into physical gold every month?

Because gold, while having bad days -- even bad years as we see this year -- goes up over time. When you accumulate a set amount -- say 100 dollars, pounds or euros per month -- your paper currency will buy you fewer ounces of gold when gold prices have risen, and more ounces of gold when gold prices are lower.

When you put dollar-cost averaging to work, you can relax, knowing that you don't have to track or time the market - which even the professionals consistently fail to do.
Buying gold in a falling market sounds easy, but most people don't have the stomach to do it. This has been seen graphically seen in recent months - particularly in western markets where sentiment is negative towards gold.

In fact, the gold market like many traded markets is the only place where people seem to get more interested when the prices are rising sharply. They are less interested when gold is "on sale" after falls in price.

This was graphically shown in 2011, when despite gold becoming overvalued when it surged from $1,500/oz on July 1st to over $1,900/oz on August 28th or 26.6% in less than two months.


Gold in U.S. Dollars - January 2011 - January 2012

August 2011 was a time to be cautious and not “pile in” after huge price gains. A strategy of dollar cost averaging at this time would have protected buyers from the subsequent price falls and the price falls of recent years. 

Dollar-cost averaging is easy to understand and even easier to do with gold ingold accumulation programmes. It will have a positive long-term effect on your portfolio by helping you to achieve diversification with safe haven gold.

The slow and steady approach of dollar cost averaging in gold accumulation programmes such as GoldSaver remain a prudent and wise way to accumulate gold. GoldSaver was the first gold accumulation programme in western markets. While Gold Accumulation Programmes are popular in Asia - in Japan and more recently China and India, they were not known in European and American markets.

Some argue that using dollar cost averaging is the sensible approach to investing in precious metals, because for many investors jumping headfirst into gold seems like a risky strategy.

What do you want from this strategy?

The objective of dollar cost averaging is to avoid a sudden fall in the value of your investment or asset soon after purchase. The thinking behind it is that by gradually moving your money into an investment, you can avoid large losses. This is a good idea, as all markets including the precious metal markets are volatile - and they look set to get more so.

Often it is argued that the logic behind dollar cost averaging is turned on its head when it comes to investing in precious metals. Because gold and silver are purchased mainly for portfolio diversification and as a long run inflation hedge, many believe the best strategy is to buy your protective metal in one go, and then forget about it – you know it will rise to the occasion when you need it most.

True, but since the whole idea behind holding gold in the first place is to protect against a market crash, systemic crisis or currency devaluation, any steps you have taken to shield your wealth will be beneficial. Think of it this way: if there was a high possibility that contents of your house were about to be robbed, does it matter whether you pay your home insurance in instalments or as a once off lump sum?

This is especially the case for smaller investors who cannot afford a large lump sum investment.

Also, it is better to have some insurance rather than none. With gold, you can purchase a small lump sum and then dollar cost average with the rest of your position.
Dollar-cost averaging is all about minimizing large losses, and is normally used when an investor has a strong suspicion the market will move up but doesn’t want to commit too quickly.

However, dollar-cost averaging can also be used in conditions where the market is expected to go down. Precious metals move in the opposite direction from the market, which is the precise reason why investors should hold them in a portfolio. When it comes to moving your money into this asset, it’s not about the traditional taking on of more risk for a higher reward; rather, it’s about building up the protection you need if stock or bond markets take a nosedive. Most of our pensions remain allocated almost exclusively to just equities and bonds.

The greatest benefit of using dollar-cost averaging with precious metals is that it allows less sure or confident investors to advance carefully into new territory.
It is consistently the case that at the times we are most likely to need insurance we are least likely to have it. Human nature dictates that the most difficult time for us psychologically to cough up a chunk of cash to protect against risks is when everything seems to be ticking along just fine.
This is especially true for the majority of us who are trying to make money, rather than simply hanging on to a large amount of wealth generating assets.

However, dollar cost averaging is not just for smaller investors or buyers. We have wealthy clients who we have advised to gradually accumulate a position over a period of months. One client bought $100,000’s worth of gold bars on the 7th of each month for 7 months. He likes the number 7.
Today, the case for using gold as a protective cover or financial insurance cannot be understated.

With markets chugging along on a veritable life support system, and each round of QE prolonging this degenerative condition at the expense of us all, there has never been a better time to gradually move your wealth into the best financial insurance out there – gold. 


Gold in U.S. Dollars - 5 Year

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Fri, 11/29/2013 - 19:13 | Link to Comment Diogenes
Diogenes's picture

30 years ago I read a book on technical analysis. Among other things, the author said it is a very comforting feeling, buying good stocks 30% or 40% off the highs. This seems to be a popular turning point for beaten down investments. If they are going to come back at all.

Fri, 11/29/2013 - 15:18 | Link to Comment disabledvet
disabledvet's picture

East Asians use gold to smuggle goods back and forth between "places." with a Chinese Navy now at sea this is going to be a lot harder to do. cash of course is still used...but the yen now plunging they'll be switching to dollars. No way will the smugglers use yuan. Instead bitcoins appear to be the "third rail" of choice when it comes to "establishing trust" between export driven machines. the other of course is war I guess.

Fri, 11/29/2013 - 14:56 | Link to Comment drendebe10
drendebe10's picture

Everyone keeps talking about doom and gloom for the past four or five years but everything keeps muddling along and the stocks go higher, the shit rolls off the illegal kenyan monkeyboy not leaving a trace and the ruling class elite and their banker cronyies life the hgih life while us peasants and serfs suffer under higher taxes, higher monkeyboy health insurance premiums and the "under control" inflation eroding dollar purchaising power.  WTF.

Fri, 11/29/2013 - 13:57 | Link to Comment fattail
fattail's picture

I don't care for the dollar cost averaging argument, i get that from all of my friends who only know investing through their 401k s and the stock market.  When the bubble pops and the tide runs out all i heard was "dollar cost average".   Its the cnbc argument to maintain their audience and try to maintain some semblance of creedibility for not alerting the viewers to the latest bubble.  How about don't invest in bubbles.  Build wealth and maintain your purchasing power.

My guy just called with a maple leaf.  No taxes just the premium i pay for his service which includes verification and the privilege of being on his list of buyers.  I buy when he calls and suprisingly he has called a couple times in the last 2 months.

 

Keep stackin...

 

 

Fri, 11/29/2013 - 16:40 | Link to Comment Colonel Klink
Colonel Klink's picture

Perfect name, must be in honor of the Amurikan population.

Fri, 11/29/2013 - 13:20 | Link to Comment 4 wheel drift
4 wheel drift's picture

unfortunately, given the size of the gold market, it wil be manioulated by the central bankers.  this, until this cartel is destroyed, gold protection will be limited...

when will the CB cartel be destroyed ?

who knows....

Fri, 11/29/2013 - 14:14 | Link to Comment All Risk No Reward
All Risk No Reward's picture

That's just it...  they are trying to destroy you first.

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
~Lord Acton

The problem is most people have no idea that a predator class even exists, let alone that they are the prey of the predator class.

Fri, 11/29/2013 - 15:22 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

But life is perfect and happy, we the safe and happy Eloi can run and play all we want. Right?

Fri, 11/29/2013 - 13:17 | Link to Comment q99x2
q99x2's picture

Right. With crypto-currencies going up like they are I'll be certain to get into gold so I can sell it to a catalytic converter company or a sculptor one day.

Fri, 11/29/2013 - 13:17 | Link to Comment Papasmurf
Papasmurf's picture

Yawn.

Fri, 11/29/2013 - 13:16 | Link to Comment orangegeek
orangegeek's picture

daily gold shows 1175 as key support - this level has not been tested

 

http://bullandbearmash.com/chart/spot-gold-daily-closes-1175-remains-key...

 

probably a good time to wait

Fri, 11/29/2013 - 13:14 | Link to Comment CH1
CH1's picture

If you're stacking, any time is fine.

If you're playing the paper market, God help you.

Fri, 11/29/2013 - 11:06 | Link to Comment Nothing but the...
Nothing but the truth.'s picture

PM's are the only protection for the  apocalypse ahead.

Fri, 11/29/2013 - 14:18 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Direct control over the necessities of life is much better than just gold.  A good community of people to protect that control isimportant, too.

This isn't gold vs debt money fraud, this is really good vs. evil with the biggest evil controlling the vast majority of the world's money systems.

Fri, 11/29/2013 - 17:36 | Link to Comment Peter Pan
Peter Pan's picture

I agree with your opening paragraph although that direct control over necessities will be sorely tested by government and neighours.

In relation to gold it is not always the right time to buy if you are price sensitive but if you are buying insurance then it is always a good time to buy given the uncertainty as to when the big one will hit.

This battle is not just about good v evil. It is also about sustainability v stupidity. Stupidity still has the upper hand due to money printing and the lack of money velocity. This unfortunately still has a lot of life left in it but we can already see this paradigm crumbling with soaring unemployment and the like.

Sun, 12/01/2013 - 21:20 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Note that I didn't say gold was bad, I just said that control over the necessities of life was better.  Given the up votes, I think people fot that.

The evil artificially creates the unsustainable system because ti empowers them and disembowels their prey.  They aren't stupid people, as in they don't know what is going on.  They are Machiavellian criminals.

The only stupidity I see is they seem to think they can GMO the planet and run these nuclear "time bombs."  I think that catches up to them.

Fri, 11/29/2013 - 14:11 | Link to Comment hankwil74
hankwil74's picture

Because when there's not enough food or clean water, gold will be king?

Fri, 11/29/2013 - 15:23 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

it may get you safe passage to more clean food & water. Less gold when you migrate early.

Fri, 11/29/2013 - 14:41 | Link to Comment sixbilliondollarman
sixbilliondollarman's picture

No Hansome, they are just going to "give you food & clean water because of your good-looks".

Besides, Gold & silver...I'll be happy to accept booze, bullets.

 

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