Make Kitco Your Homepage

Here Is How To Get Extra Return From Gold

Commentaries & Views

Precious metal investors can get extra return from gold by bringing some sophistication to their buying.  The sophistication involves technicals, short-term fundamentals, long-term fundamentals, different time frames, money flows and probabilities of reaching various price levels.  Let’s explore starting with a chart.

The Chart

Please click here for a long term chart of gold. The chart is of gold ETF (GLD).  Similar observations can be drawn from silver ETF (SLV) and gold miner ETFs (GDX) and (GDXJ).  Please note the following from the chart.

  • Gold appears to be forming a bottom.

  • The bottoming process is occurring in a wide range.

  • Significant resistance is ahead.

  • The bottoming process is a weak one, a breakdown from here cannot be ruled out.

  • For the bottoming process to be complete and gold to take the next up leg, gold will have to decisively break out of the upper resistance line shown on the chart.

  • The chat shows with a green box when The Arora Report calls were to buy gold and a red box when The Arora Report calls were to sell gold.

  • The chart also shows The Arora Report calls to back up the truck and buy gold in the $600 range. The chart also shows The Arora Report call to sell one-half of the gold at $1904, which turned out to be the high and stop loss on the remaining at $1757.  Then The Arora Report generated huge profits from gold falling by going short as shown on the chart.

Long Term Fundamentals

So far, the very long-term reasons for gold to go up significantly have not been reflected in the price of gold. Sooner or later the chickens are going to come home to roost.  Take a look at the following:

  • Will there ever be any consequences of massive money printing by the central banks?

  • $20 trillion debt burden in the United States.

  • High trade deficit.

  • Underfunded social program liabilities in most major countries.

  • Higher deficits resulting from the tax reform in the United States.

  • Heavy debt levels in most major countries outside the United States.

  • Deficit spending in most major countries outside the United States.

Gold And Silver Ratings

The Arora Report precious metal ratings are widely used by bullion dealers, jewelers and investors across the globe.

The first cut of ratings on gold and silver at The Arora Report is generated by complex algorithms that automatically change with market conditions. Then human judgement is added before publication.  Inputs to our algorithms include relationship between currencies, interest rates, sentiment, money supply, global geopolitical picture, global GDP growth, inflation in key countries, leading indicators of inflation, risk appetite, mine production and jeweler demand, smart money actions, speculator actions, and our proprietary technical indicators.

Here are our current ratings that take into account not only the rewards but also the risks. The goal of every investor ought to be to generate high risk adjusted returns, i.e., returns in excess of those commensurate with the risk taken.  These ratings are designed to produce higher risk adjusted returns.  In our over 30 years in the markets, one of the biggest and most common mistakes we have seen investors make is to ignore risk.

  • Neutral in the very, very short-term.   

  • Neutral in the very short-term.

  • Mild Positive in the short-term.

  • Mild Positive in the medium-term.

  • Mild Positive in the long-term.

  • Positive in the very long-term.

These ratings are reviewed daily and changed frequently to help both long-term investors and short-term traders.  For definitions of time frames, please click here.

Allocation To Precious Metals

From 2007 to 2011, Arora allocation to precious metals was 20% of the portfolio. For those who are inclined to always have gold in their portfolio, a long allocation of 4 - 6% to precious metals from a very long-term perspective at this time is appropriate. This allocation is often changed based on market conditions.

Sophistication

When you bring the sophistication of all the elements above together along with scaling in using small quantities when proper signals are given, you can significantly add to your returns.

Full Disclosure: Subscribers to The Arora Report are provided precise buy zones and sell zones as appropriate.  Further, subscribers to The Arora Report may undertake short-term trading positions in addition to the very long-term generational opportunities.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Precious Metal Charts

Follow Kitco News

Holiday Promo Mucha