Question 1: How to anticipate buying and selling trend?
Answer 1: There are two ways to look at it, the long-term and the short term.
Long-Term :
The long-term focuses on determining the current investment cycle we are in presently, the stock cycle or the commodity cycle. The cycle switches from one another on an average of 18 years per cycle. At present, we are in the commodity cycle. Gold is the midst of a long-term bull market. It is supported by valid fundamental data.
They include dwindling faith on the value of global currencies such as the US Dollar, the Euro, and the Yen, tensions in the Middle East, and rising gold demand in Asia, particularly in China, India and the ASEAN region. Supply, however, is struggling to keep up with productions despite billions of dollars invested into exploration and production activities over the last 10 years. This is due to aging mine facilities, depletion of gold reserves and unexplored deposits located in remote areas.
Short-Term :
However, it is common to have short-term ups and downs in gold prices in a long-term bull market. One of the objectives is to buy gold at the lowest possible prices. Personally, I use the SMA 50 – 150 crossover method to identify changes in price trends. It is one of the popular tools for investors to identify the start of a price uptrend and more importantly, to identify the end of the uptrend in order to exit the market before prices start dipping.
Personally, I do not use this method to identify every possible change in price trend, buying at every low and selling at every high. This is because I am not an active trader. The SMA 50 – 150 crossover method is just a tool for me to get the best possible / the most reasonable price I could possibly get for gold and silver. It is also a tool that helps me to avoid or minimize the risk of making an investment decision at the wrong time.
This article is contributed by bestselling book author, Ian Tai. Want to learn more about gold and silver investment? Get Ian’s free training at Gold Silver Method.
