In the october 4th post i mentionned the USD 1280 level as the trigger for more Gold sell-off. This took Gold to levels as low as USD 1240-1245 per ounce. A small base has formed in the USD 1240 – 1250. On technical side Gold is recrossing up its 200 days MA and daily MACD is positive again based on current session action. This has to be confirmed on a closing basis as usual.
Generally speaking, reasons to own Physical Gold or Gold linked assets are multiple especially in a heavily indebted world economy in which liquidity provided to the system by CBs reach levels never seen in the past. These reasons amongst others are : Potential risk of inflation (UK, US, EM), Negative real rates, Store of value, growing distrust in banks , politics and paper currencies, low correlation with other asset markets, Gold under-owned by CBs, limited amount of metal available, multiple geopolitical risks, …
I consider buying Gold or equivalents as a protection/insurance against the abovementionned risks : 10 to 15% MINIMUM would be a « must » in any portfolio for the long run.
- Buy 0,50 unit of GOLD at current price USD 1270 . The other half would be bought should the metal extend its decline to the very strong USD 1200 support. This is 1/2 of position sold at 1285 in May.
- Buy 1 unit in GDX at current price (14:43 GMT today USD 24,5250) – the most liquid and common Gold mines tracker – . 200 Days MA has been recrossed up and daily MACD is +.