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Wednesday August 04, 2010
Three reasons to buy SPDR Gold Trust (GLD)
by Mike Turner, editor Mastering the Markets  I do believe a lot of fundamentals and technicals and time-cycle indicators are now pointing to an up-trend in gold. As such, my latest recommendation is to buy the SPDR Gold Trust (GLD), a a gold ETF that tends to reflect one-tenth the actual price of gold. My proprietary forecasting software system indicates that GLD could stay relatively flat for the next three weeks before beginning a rather sharp upward trend. The uptick in my indicators suggests that this could be the start of the more significant uptrend that is being forecast for the first of August. As for why gold looks to move higher in August and September, here is my rationale: 1. Markets tend to move in cycles. These cycles can be mapped against immutable and unchanging waves of pure time. 
My software systems have the ability to find the most highly correlated set of time-waves to actual highs and lows in many different market indicators, including gold. Every week I do an exhaustive study of GLD using my time-cycle algorithms from the past 12 years. The results are forecasts that are often (as much as 80% of the time) accurate. So, in essence, I can say that based on data from the past 12 years, gold is "supposed" to stay relatively flat for the next three weeks and then move up in dramatic fashion. 2. The state of the euro and the European Union is getting more tenuous, not less, in my opinion. I can only imagine what would happen if the euro fails and the EU breaks back up into distinct countries with their own unique currencies. The turmoil in global financial markets and attempts at unwinding investments based on or actually in euros is unthinkable. 3. Then there are the usual suspects. The large amount of U.S. debt, the possibility of another recession in 2011, the catastrophe in the Gulf, looming tax increases in 2011, persistent unemployment problems in the U.S., the powder keg in the Middle-East, and on and on... Any of these or a combination of them could weigh on global economies and/or trigger an outbreak of investor fear that could drive gold prices dramatically higher. But it is my job to think about the unthinkable. Failure of the euro would cause the U.S. dollar (and several other global currencies) to skyrocket higher. Deflation could overwhelm our economic system and gold could move higher than even the most rabid gold bug could imagine. I think the odds of this event occurring are low, but to ignore even the possibility of such an event is putting too much risk on the table. In summary, it has been a while since I recommended gold, but I believe the time is once again right. Learn more about this financial newsletter at Mike Turner's Mastering the Markets. |
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