Check out the graphs in the link below:
Do you believe this statement: "What can you do? Make sure you have money outside of U.S. dollars and in history's most stable form of money... gold (From the above link)."
Why should anyone save $?
Two solid questions given the turmoil in Greece and the insolvency of the United States, whether we choose to recognize it now or later is a different theme.
Gold: The answer for me is both yes and no! That may sound odd, but we have been selling our gold the past 12 months and reducing our total exposure. In fact we sold some last Tuesday.
Below is the daily chart of gold. We have a drop then what looks like a 5 wave wedge and now price is falling. The classic view is we are in wave C down then another pusher higher before a larger correction.
I've seen this E-wave view, which reflects the 5 wave wedge is a truncated wave 5 ending diagonal. Interesting to say the least and extremely bearish.
Below is the weekly chart and once again the weekly MACD is ready to roll over with price pushing lower. We have a chance for a strong correctional phase if price gets below the blue uptrend line and the RSI breaks 50.
Below is the monthly chart of gold and this is the one I'm really watching. What I think happens is we might get one more push higher, maybe above $1,600. But I expect price to enter a correctional phase when the monthly MACD rolls over. We are so over bought and ripe for a correctional phase.
That doesn't mean it has to be a collapse in price. No, I actually prefer a correction in time that is mostly sideways and range bound. But given the over bought natural, range bound could be $1,000 on the down side.
If we look at the MACD, the big bump is usually the end of wave 3. So, we are due for wave 4, a correctional phase that could fall back to the 4th of wave 3, so a correctional phase could end up between the two blue lines, which also serves as strong price support. A 4th wave is why I'm looking for a large range bound correctional period versus a sharp pull back.
So, given that out look, we've been selling some gold lately.
Buying gold and silver:
While I'm managing my families total exposure to metals and metal stocks lower, we still own some, albeit far less. Since we bought our metals back in 2003 and 2004, we have enjoyed very nice gains!
That being said, I think everyone with more than $100,000 in real wealth should have 5-20% of their assets in metals in some form. From a diversity perspective how can you not. I prefer the actual metal myself!
If my correctional view of gold right, that range bound or sideways correction will serve as the next great launching pad for metal prices, because at the end of the day, I do not think the secular bull market is over because there are no divergences on the monthly MACD. In that view, we are due for a cyclical bear within it the secular bull market!
If so, we look to increase our metal position should that correction develop, but that's really months (2012 or 2013) down the road because it will take that long for the monthly MACD to unwind from being over bought.
Those are my current thoughts on gold!
I think we are learning the hard way that saving money is the only way to build true wealth. If you can't get in at the bottom of a bubble in stocks or gold, how else do you build wealth. How else do you create a reserve for challenging times.
Yes, the purchasing power of that savings might be worth less because of a devalued currency, but it's all relative to how much more you have in savings compared to the everyone else. If my pile has less purchasing power, but my pile is bigger than your pile, well then yippie for me! Right!
You see your standard of living is relative to everyone else otherwise no standard would exist! How big your pile of money stacks up matters regardless of how much it's been debased by a falling currency. But then again, this is why some precious metals is mandatory and a smart wealth (standard of living) hedge!
Hope all is well.
J.D. Rosendahl, Rosey