As gold sinks, is it a buy?

[Ad Orientem]

This guy says yes.

[iwealth]

Not sure but I may do some tax lost harvesting here and switch from GLD to IAU in case we're bottoming.

[Reub]

Don't try to catch a falling knife!

[Kriegsspiel]

How else would you make money from it?  Were you being sarcastic?

[Reub]

I would wait until it has 2 consecutive positive days, including at least a 1%, before I even considered buying it.

[AdamA]

I like to buy PRPFX on days like this.

It feels less speculative than trying to time a gold purchase, and I have confidence that even if it keeps falling, it will eventually give me a positive return.

[Ad Orientem]

Prognosticating: The act of predicting the future.
Speculating: The act of backing one's prognostications up with money.

I do the former all the time, the latter very very rarely.

With that out of the way let me prognosticate a little. Long term, I am bullish on gold for much the same reasons cited in this guys pitch. But the key phrase is long term. I just don't see a huge downside to gold while central banks are tripping over each other in a mad rush to debase currency and most of the world's industrialized nations are so heavily in debt that were in not for their ability to print money they would be bankrupt. And yet we are still clawing our way out of a deflationary crisis which could be exacerbated by deep government spending cuts. So if I were speculating on my prognostication (which I am not) I would definitely see this as a long term play.

But there is no way that once the inflation genie gets out of the bottle the FED is going to be able to snap their fingers and order it back in. I'm going out on a limb here but I think gold could easily double in price over the next five years.

[MachineGhost]

I would wait until it has 2 consecutive positive days, including at least a 1%, before I even considered buying it.

You should use the 4-currency gold timing model instead.  A rising tide lifts all boats, yes?

[Pointedstick]

I would wait until it has 2 consecutive positive days, including at least a 1%, before I even considered buying it.

You should use the 4-currency gold timing model instead.  A rising tide lifts all boats, yes?

Would you mind elaborating?

[dualstow]

How else would you make money from it?  Were you being sarcastic?

I don't think he was being sarcastic but, since no one can know the answer in advance, he was being rhetorical.
You could lose money if it sinks further, and you
could make money buying gold as it rises, as long as it rises further.
Right?

For now, I agree with Reub. Could be a falling knife.

[annieB]

I would wait until it has 2 consecutive positive days, including at least a 1%, before I even considered buying it.

You should use the 4-currency gold timing model instead.  A rising tide lifts all boats, yes?

Would you mind elaborating?



4-currency?
Hope you can share this one MG..

[Reub]

Here is MG's quote:

"A simple method for timing gold bullion that historically outperforms buy and pray is to check the price of gold in the four major currencies (USD, EUR, GBP, JPY) at the end of each month and if all are showing a positive gain, then buy the gold, otherwise wait until next month.  However, I do not know how that compares to DCA into gold in a bull market.  As long as real interest rates remain negative, gold will remain in a bull market."

MG

[MachineGhost]

Here is MG's quote:

"A simple method for timing gold bullion that historically outperforms buy and pray is to check the price of gold in the four major currencies (USD, EUR, GBP, JPY) at the end of each month and if all are showing a positive gain, then buy the gold, otherwise wait until next month.  However, I do not know how that compares to DCA into gold in a bull market.  As long as real interest rates remain negative, gold will remain in a bull market."

To deal with the daily volatility, use the average gold price for the month when doing the comparison.  Now, lets be realistic.  In such a backtest, it would not account for the spreads or the commissions for coins and that was surely dramatically higher back in the 70's and 80's than they are now.  But as a guide for when to get in or DCA as opposed to trading in and out of gold and cash, it does the job.