Today's Market
by Dr Invest

About Gold

Some people are still asking about gold. Gold is a commodity and only warrants one's investment if it is MAKING MONEY. Look at the chart below:

What this chart is telling me is that GOLD would have been a poor investment over the past six months. And over the past year 1.74% return is still poor. It really make no difference that Gold gained 800% two years ago, at this moment it is a loser.

The only reason to invest in a commodity is if it provides a reasonable return. Gold is not providing much of a return.


Reason to Hope

Let's look at the one year chart for Gold. We do have a technical that looks like a bull penant. This would normally indicate a nearby uptrend. The problem here is the dollar valuation. The dollar appears STRONG, when compared to other currency. It doesn't appear that the dollar will weaken until the Euro regains some strength against the dollar. A good ole recession will take the dollar lower, but with continued government intervention it is unclear about the near-term outcome.


When we look at the 6 month gold chart, we see a clear side-ways movement in gold which means a possible break-out (which is my prediciton) or a trending downward. The problem is that we don't know how long this consolidation trend will last.

We could see a break-out in September or August, but anticipating FED intervention just before the election, I think that gold prices will not break-out until 2013.

This still begs the question, should I invest in gold now? As an investor, I would not make an investment in anything that is stagnant or could move lower. Each investor has a different investment style, but for me there is no reason to be invested in gold until the dynamics of the market change so Gold can move higher.

For now, I am satisfied with my position in TIP and BND using the Ivy Portfolio Method. My gains have already exceeded the return on gold for the year and I have been invested in TIP and BND since the first part of May. Gold could break-out and then would be a viable option as an investment. Until then, I'm watching.