To succeed in this market, you have to buy as if you were a machine. It is never easy to buy in the middle of a sell-off since it always looks like there’s more room to run on the downside. That’s why it’s so critical to buy based on value. It is this focus on value that allows you to buy with conviction in the midst of a selling storm.
Amidst all the wreckage in the gold market lies the fact that we are forming what I believe to be a bottom in this intermediate term decline. I cannot emphasize enough how the key to trading this market is to buy weakness with both hands while others are running for the exits. It is not the time to be bearish.
The gold market trades unlike any market out there, so it naturally takes some time to understand exactly what’s going on. What tends to happen in the gold market is massive selling as soon as a critical support level is broken. A breach of critical support triggers program selling, which creates what appears to be a cliff dive in the charts. Whenever I see such a cliff dive, I patiently wait for an entry point to accumulate more gold. I do not panic like other investors.
The latest bout of selling occurred once $1180 was breached. This was a level of support that held multiple times the last couple of months. Panic selling immediately brought gold down to $1165, then to $1155. I was accumulating at $1160 once selling pressure began to wane.
The gold market has taken back $1180 fairly quickly into today’s close. This is bullish. I’m looking at $1200, $1210, and $1225 next. If those levels are breached, we should be on our way to new highs. The train is about to leave the station. All aboard?