Saturday, October 1, 2011

Gold as a Long Term Investment! - Market Analysis for 3rd October 2011 by Singaporeseeds

Daily chart for Dow

Daily chart for S&P

Daily chart for NASDAQ

My last market analysis:
“The S&P tested the 50 day moving average and reversed. On the shorter term, the markets should bounce before market open (to around 1,150) and then continue the drop to support at the August 2011 lows. At the moment, it seems that the market might bounce at these lows. We have to see how it goes.
My final target is still at 1,000 by the end of October 2011.

All 3 indexes went back up to test the 50 day moving average and fail. Market bounce is over for now. The EUR/USD, Crude oil and the market had been moving in sync for the past few weeks. Both EUR/USD and crude oil are pointing down right now. I had a bounce signal for EUR/USD mid-week, but the signal failed on Friday. Failed signals are more reliable than successful ones and we should see all 3 (EUR/USD, Crude and the indexes) move to the downside next week.
Final target still at 1,000 by end Oct 2011.

Daily chart for Dollar

My last market analysis:
“The dollar had reached my target on UUP and is reaching my final target at 81 on dollar futures. It should continue to trend up for another 3-4 more days.”

I was expecting the dollar to dip before continuing the next leg up. But looking at weekly charts, the dollar is still very bullish (huge bullish divergence) with 4 more weeks of rally to go. This might be a strong rally up similar to what we experienced in Aug-Sept 2008.

Final target at 82.5 on dollar futures. This would be 23.50 on UUP.

Daily chart for Gold

My last market analysis:
“Gold did a huge $200 move over the past 3 days. As I’ve posted last week, gold is reaching the end of its parabolic move and it’s going to be explosive. It might continue to hit my target at 2,000 but I’m going to stay away from both gold and silver until I see some stability.
However I think both gold and silver should bounce over the next few days. Target 170 for Gold (GLD) and 35 for Silver (SLV).”

Both gold and silver are showing a pennant on daily & hourly charts. This should break to the downside. However with the fear in the market, I think gold should move in a sideways fashion.

However one thing for sure is that I’m staying out of precious metals until I can see a clear trend. I’ve had all kinds of people raving about the long term attractiveness of gold over the past few weeks. Gold had never been a good long term investment. See the long term chart of gold:

Monthly chart of gold from 1974 until now

Gold moved SIDEWAYS for 25 years from 1980 to 2005. It only started its crazy rally at the end of 2005. This shows that gold was never a good long term investment and unless you are trading gold short term or a gold jeweller, you can never make any reliable profits from gold.
Gold is now parabolic and those who know what happens to parabolic charts will know that it never ends well. I believe we are very close to the end of this parabolic rally. From the looks of the daily charts for September, the double top is a strong indication that the rally might have ended.
Personally I’m expecting one final spike to 2,000. No more than that. I got out of all things golden (except for a Singapore Mint one ounce gold coin) in early September and do not intend to re-enter on any long positions for the foreseeable future. By the way, if anyone knows where I can sell the gold coin at a good price, please let me know.

Daily chart for Silver

As for SLV, my target is at 18.60.

Daily chart for Crude Oil

My last market analysis:
“Crude oil gapped down out of its wedge and dropped. Target still at 29 on USO.“

Crude tested resistance at 32 this week and reversed back down. Target now at 28.

Daily chart for Natural Gas

My last market analysis:
“The bullish divergence on RSI and MACD should be a signal for higher Natural Gas prices soon. This is the same for weekly and monthly charts.

We should see the start of a multi-year rally for Natural Gas by the end of the year. As I’ve reiterated numerous times, this is a long term play so be prepared to keep some gas for a couple of years.”

Analysis is still the same.

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