Gold Rush

Gold is up $60/oz.  in two weeks.  Friends have been asking me if they should buy, hold, or sell.

I’m not currently in the business of giving professional investment advice. I can only tell you that I’m continuing to own gold for my own accounts.  Not adding any more right now, but it still looks like a good hold.  A few things here… there are no signs of technical resistance in sight.  From a seasonal perspective, we are getting into the strongest part of this year.

By running a fourier transformation to pick-up short-term market cycles based on 10-years  of data, it appears that  the 16-day cycle is the strongest for gold and peaks around August 5th.  This cycle appears very statistically significant.  So for swing traders, this might be a  decent exit window.

Longer-term, there is some huge seasonal strength in September.  This is the month when jewelers start buying in anticipation of wedding season in India.  The magnitude of this effect is typically about 3% going into the beginning of october.  If we apply this as a price target, it would put gold just over 1700, up from the current level of 1658 – provided that we do not see profit taking in August.

 

 What are some of the better ways of owning gold?  I hold gold ingots and American Buffalo coins purchased through Fidelitrade in Wilmington.  The commissions spreads are reasonable and unlike an ETF, there are no management fees if you take possession.  Physical gold only makes sense as a long-term holding, because of transactions costs (which are not negligible).

Shorter-term, I use the ETFS Physical Swiss Gold ETF (ticker:  SGOL).  This seems to have the best audit controls relative to the universe of exchange-traded funds (ETFs).  As an ETF, it can easily be held within a standard brokerage account.

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