Gold Trend for 2009
People always wonder when any investment goes down if it is smart to buy in at that time. Peoples’ minds run wild with concern when there are corrections in any market they are invested in. What one must follow are the trends. Look at the chart above. This chart says it all. There have been many ups and downs in the gold market this year, some small and some large, however the trend is positive. Gold has been in a long-term positive trend cycle since 1999. Don’t let the normal market action from day to day be of concern. When putting money into anything for the long-term one must only concern themselves with the trend.
What goes up must come down, this is healthy. If the market were only to rise with out building support along the way it will most likely crash hard. It is like building a house without laying a foundation. All markets trade within a trading range, with support on the bottom and resistance on the top. Without getting too technical, the market will try to test support on the bottom, and if it breaks it, the market will then test the next support level. If it breaks resistance on the top it will try to test the next resistance level. Essentially this is a trading range. Look at gold in the chart above. It tested resistance at $1,000 twice this year before it finally broke it. Then it built a foundation above $1,000. It rose rapidly to $1,200 per ounce before correcting; no foundation has been built above $1,100 yet.
If gold rises above $1,100 and stays above it, it will build a foundation and possibly test the $1,225 mark again. The net net is follow the trend and apply funds for the long-term. Allow money to work through the trends. Be in during bull markets and out during bear markets.
We believe that everyone deserves a properly developed strategy for financial safety.
Lynette Zang
Chief Market Analyst, ITM Trading