Over the past few months, friends and colleagues of mine keep asking me these questions “Isn’t it time to buy gold now?” “Are you buying now?” I know about a few investors who went in to buy some gold. They are looking at long term investment as they have the power to hold it. I believe that if the gold price goes down further, they will buy more. I am different. I do not have so much cash and I do not have such a great holding power therefore I need to find the right time to get in.
During the first drop, the gold prices went from $1798 to $1322. A difference of $476, which means a 26% loss. At that time a lot of people rushed in to buy physical gold like necklace, gold ring, gold bar……… 26% dropped is a psychology level. Imagine free falling from a height of 1,800 meter. At 1,300 meter I release my parachute. What is going to happen next? Immediately the force would pull me back up to 1,500 meter, before I continue falling.
Jun’13 gold reached another low of 1181. And again, it bound back to 1348. Has gold touched it lowest point? I don’t think so. 1920 to 1530, back to 1798 then dropped to 1322, bound back to 1488, dropped again to 1181 and back to 1348. Lower low, higher low. I have not seen the sign of higher low and higher high. Gold is still in the bear market and has yet to touch it lowest point. I am looking at around 960. If it drop below 900, I will buy more.
Gold mining:-
With 12 years of bull run, more mines started opening. It costs money to close a mine and it costs money to re-open a mine. It is expensive, so people are reluctant to close mines if they can. Production cost for gold mining is around $1,000 to $1,200. Some even at $1,300, depending on the scale of miners operation. Price falls below those level is definitely a pinch to the miner companies. Therefore economists and analyst think that 1,200 to 1,300 is a strong support level. I agree with them. That’s why we see twice - 1322 bound back, 1181 bound back above 1300. But I see that traders and investors may play a difference game. Just look at Crude Oil. In year 2008, oil reached the peak of $147. Then it dropped all the way to $33. A lot of people was shocked, an unbelievable drop of 77.5%. Will that happen to gold? Let’s see. I am eager to see the gold making a nice bottom in maybe 2014 or 2015 and make a U-turn, to a bull market.
Gold price movement summary:-
- Gold has a bull market for 12 years. In Sept’11 gold reached its highest peak in history - $1920/oz.
- After that, gold price moved side way between the range of 1530 to 1800 for one year. Over that one year period, the gold price hit both top and bottom thrice. The third and final top was at $1798 which took place in Sept 12.
- Mid of Apr’13, gold price plummeted all the way down to 1322. Then it re-bounded back to 1488 in 3-May’13.
- 28-Jun’13, this time it dropped to 1181. 22-Jul’13 gold price bound back to 1348.
During the first drop, the gold prices went from $1798 to $1322. A difference of $476, which means a 26% loss. At that time a lot of people rushed in to buy physical gold like necklace, gold ring, gold bar……… 26% dropped is a psychology level. Imagine free falling from a height of 1,800 meter. At 1,300 meter I release my parachute. What is going to happen next? Immediately the force would pull me back up to 1,500 meter, before I continue falling.
Jun’13 gold reached another low of 1181. And again, it bound back to 1348. Has gold touched it lowest point? I don’t think so. 1920 to 1530, back to 1798 then dropped to 1322, bound back to 1488, dropped again to 1181 and back to 1348. Lower low, higher low. I have not seen the sign of higher low and higher high. Gold is still in the bear market and has yet to touch it lowest point. I am looking at around 960. If it drop below 900, I will buy more.
Gold mining:-
With 12 years of bull run, more mines started opening. It costs money to close a mine and it costs money to re-open a mine. It is expensive, so people are reluctant to close mines if they can. Production cost for gold mining is around $1,000 to $1,200. Some even at $1,300, depending on the scale of miners operation. Price falls below those level is definitely a pinch to the miner companies. Therefore economists and analyst think that 1,200 to 1,300 is a strong support level. I agree with them. That’s why we see twice - 1322 bound back, 1181 bound back above 1300. But I see that traders and investors may play a difference game. Just look at Crude Oil. In year 2008, oil reached the peak of $147. Then it dropped all the way to $33. A lot of people was shocked, an unbelievable drop of 77.5%. Will that happen to gold? Let’s see. I am eager to see the gold making a nice bottom in maybe 2014 or 2015 and make a U-turn, to a bull market.
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