Here Is How To Get Extra Return From Gold
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Featuring views and opinions written by market professionals, not staff journalists.
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.
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.
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:
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.
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.
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.