Gold Looks Very Bullish Into the End of 2012
A commentary on recent events by National Gold Group’s Michael Carr – November 26, 2012
Many investors make decisions about where they should invest new funds towards the end of the year. There are a number of valid tax planning and personal financial planning reasons behind the timing of this decision. In part because of this new money, the stock market tends to rise at the end of the year. Since gold became available to investors as an exchange traded fund, gold has also shown this tendency to rise at the end of the year and that up trend continues into the first months of the next year.
In addition to strong seasonal tendency, gold is also a buy based on a reliable technical indicator that measures momentum. The relative strength index (RSI) is widely followed by traders, but is not a very useful trading tool by itself. However, the RSI can be converted into an accurate market timing tool by looking at moving averages of the indicator. This is similar to what is done with closing prices in the calculation for the very popular MACD indicator. Right now, the RSI moving averages indicator, as shown on the daily chart below, are on a buy signal.
This indicator, which has a strong track record, shows that gold prices are likely to be higher at the end of the year of the year than they are now. For those deciding whether to add to their gold positions, acting sooner rather than later could be a profitable decision.
The above commentary is for informational purposes only and is not a solicitation by National Gold Group or Michael Carr. It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of National Gold Group. Any references to outside sources are believed accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial advisor before making any investment decisions.