Let's Buy Gold
In the last Gold Investment Update series, I have shown as above that the gold price is going up after forming the third triangle in a tetrahedron formation. The gold price then marches in an upward direction. I ought to kick myself for not adhering to the Gold Tetrahedron Theory and bought when the price made an immediate upward swing at the base of the triangle.Expecting the price to drop dead yesterday when the price was moving lower but it didn't. Look at the chart below.
I stayed up till 2am this morning (30 January 2009) watching the price bounced back up. Crossing my fingers and hoping that the price would cross the red line, yet it didn't. This morning I immediately decided that this bullish trend still has some oomph left and head straight to the nearest Public Bank. Price in the chart is showing USD906.50. The bank sold it to me at RM107.62.
I stayed up till 2am this morning (30 January 2009) watching the price bounced back up. Crossing my fingers and hoping that the price would cross the red line, yet it didn't. This morning I immediately decided that this bullish trend still has some oomph left and head straight to the nearest Public Bank. Price in the chart is showing USD906.50. The bank sold it to me at RM107.62.If all the analysis are correct, we might see gold price continues to skyrocket to USD980-USD1000 region. I would be happy even if it reaches the USD980 point.
Price is not the factor to consider in investment
Now, I know the price is high at this point. Even the bank teller was telling me "Price is very high now. Do you want to buy?" People are scaring $#!t and even chickening out when I give the buy signal.
Well, shall I listen to the young bank teller (who may not have done any analysis at all and just based her judgement on price alone) or trust my own thorough analysis?
I remember the late great master trader W.D.Gann had written something like this: In a bullish trend, no price is too high. In a bearish trend, no price is too low.
If you based your investment on mere price alone without studying the charts, it is like when you hear the thunder and say "Oh, it is going to rain." But do you know when it is going to rain? It could be an hour from now, it could be two hours from now. Or never. Just hearing is not enough, you got to go out and look at the clouds, stick your thumb in the mouth and hold it up in the air, feel the wind and temperature.
Study the charts first, not just looking at the price and concluding a decision to buy or sell.
The analysis I provide here is not comprehensive. I am reserving the other information for my book. Other analysis are showing a buy signal. It's an overdue signal. The signal was a few weeks ago but the momentum is still strong and might last a while more.
Take your chances. I am not forcing you to be with me. If you do, may the force be with us.
Posts
23 comments:
Hi,
I feel excited looking at your gold investment analysis, by the way, can we do fast trading on public bank gold investment account? Or any service charge or handling charge we need to pay and any rules we have to follow?
Koh,
Not sure what you meant by fast trading. I am equally excited on the gold trend at this moment.
Here are the details on Public Bank Gold Investment Account: http://www.pbebank.com/en/en_content/personal/investments/gold.html
All transactions are over the bank's counter. And you will be given passbook to record the what's the price you bought, and how many grams.
It's very simple like how you save money in a savings account.
There is a buying and selling price difference like buying currencies at your friendly neighbourhood money changer.
For example, bank's selling price is RM107.82 (your buying price), and buying price is RM103.53 (your selling price).
So you got to wait for the RM103.53 price to move up above your price of RM107.82 before you can make a profit.
Read my other gold investment articles to learn more: http://www.unit-trust-investment.com/search/label/gold
Today the gold jumps to RM 110.22 per g if you buy from PB. Looks like it will drops a few and up again within this week.
According to the chart analysis,it might not exceed 1000 per ounce. Possibly could earn about 3~6%.
But who knows, since it is uptrend now, hope it could break 1000 point.
CK, yes, a retracement down is likely. However, the US and UK are currently in bad shape. This will push the gold price up as we have seen in the past weeks. The US and UK markets are the one holding the price up.
For the short term, USD1000 may seem like a tough point to reach. However, that's what they said last year before it reached the historical high of USD1033 on 17 March 2008.
And looking back, few years ago I thought the price was very high. Yet in comparison to today's price, the price back then was so cheap at USD300.
Let's just hope the price will shoot up further.
Carson
I'm new to gold investment and I'm planning to make a buy soon.
One thing I noticed today is that the Maybank gold investment rates went up (RM111.25) eventhough the US per oz went down to USD901.80 from USD912 yesterday. Not sure about PB because their rates quoted on the website is still showing 30 jan 09.
Do the banks trade in real time?
Bigcityb,
The USD is currently strengthening. That's the reason why you see the price in RM going up when the gold per oz quoted in USD is coming down.
PB rates is usually updated around 9:50am. The price is updated on the website a few times in a day.
For Maybank, I don't see them trading in real-time. For Public Bank, the price is updated a few times throughout the day. That's as close as you get to real-time.
Please read my previous article for further information:
http://www.unit-trust-investment.com/2008/12/140-public-bank-vs-maybank-gold.html
Carson,
Hi,I'm new to gold investment and still in learning stage. I found that gold investment is not so popular among Malaysian so I lack of source of analysis and advice.
Personally,I have some doubt about the future of gold price.Hoping for guide on this.
firstly,the relationship of gold price and USD or other currency which support the price.
secondly,the cyclical of gold price( example like unstable economic environment or huge demands during festival--->chinese new year Will these issues boost the gold price???)
lastly, the relationship between oil price and gold price.
By the way, izzit reasonable to begin in gold investment with 5--10k capital??
As a student without income,I'm currently looking for low risk investment.
Kent Chang,
Gold is a low risk investment. While the markets around the world has dropped as much as 40% last year, gold has only dropped a fraction.
It's great that you have chosen to invest in gold.
Now, your questions.
1. Gold price and USD are closely related and usually travel the opposite directions. However, there may be times that they travel together as seen in the past few weeks. Other currencies have relation with USD, therefore you can see similar reaction.
2. Unstable economic times will surely boost gold price. This is evident in early 2008 when US was in bad shape towards the end of 2007 (US went into recession in Dec 2007). In these recent times, gold will be in a bullish trend since the world is in bad shape financially. Chinese New Year demands has little impact on gold price. Not the whole world celebrates Chinese New Year.
3. Oil and gold price has some relationship. However, oil and USD have a closer relationship. Because of this, you will see oil and gold have some relationship via USD.
Any amount is good for invesment. Start small and build it up over the years. You'll be surprised to see how big the amount will be later.
carson,
thanks for the explanation.
keep up the good karma of sharing!
Carson,
Thanks for the explanation.
I really appreciate all your sharing.
By the way,I would like to know do u trade gold frequently?
In gold investment, how do we define period of investment( short term, long term)???
It is bad to find that those bank do not provide online gold trading.
If I'm not able to keep an eye on the real time gold price, izzit better for me to trade in Maybank instead of Public Bank?
Kent Chang, you are welcome.
On the last trade, I held it for 66 days and made 11.9% profit. This is not a commodity style trading where you buy and sell within the same day. To see profit or 10% to 20% within 2 months is quite possible if you buy at the right time.
I have heard these terms a lot, short term and long term. Short and long are all relative. To some, a year is consider short term. To me, if it takes a year to make 10%, I will find it long. After all, if you can make 11.9% within 66 days, why wait for a year.
For any investment, best to find the right time to buy and sell. Buy at a low and sell at a high even if it only takes a month. You can see the gold price chart for last year did really offers many opportunities to buy and sell within short period of few months.
The price is not that volatile with gold. You will be much better off to invest with Public Bank. Because the buying and selling price difference is much smaller compares to Maybank's.
from your chart, it seems like the next roof to break could be 948 for the next 2 weeks. then it may converge between 880-920 in next 3 months, it would be exciting if it break above 950 yes.
indeed its very exciting reading your analysis, can we buy gold index in malaysia without going through bank ?
Michael Tsen,
My chart is only a partial view. Can't really based the roof/ceiling/resistance on the above chart alone. However, 920-940 level is the next resistance. Once that is broken, we shall see further upward movement.
I have not fully explored other ways of investing or buying gold. In Malaysia, however, the safest is dealing with the bank.
There is online trading of gold but your money has to be deposited in the USA. And the websites/companies are maintained by foreigners. Not sure how safe and secured they are. Though many people in Malaysia trade in forex in much the same way.
Looks like the gold price fluctuate a lot these days. Maybe it will break the resistance point if the US stimulus package is approved? What do you think?
CK,
Yes, the price is fluctuating in a small range. This, to me, is a sign of strong buying going on and hence keeping the price up.
Not sure yet how the price will react after the US stimulus package is approved. I don't rely much on the news. They have proven to be unreliable many times. When you think it will go up because of certain upcoming news, it came down instead.
Just keep monitoring the chart for the price movement. Anyway, for long term, gold is still bullish because of the over-printing of US Dollars.
Hi Carson,
Regarding the buy & sell vs buy & hold issue (Can’t remember which post is that), I have some comments.
Previously you mentioned that you bought at RM86.03 on 28 Oct 08 and sold it at RM96.29 on 2 Jan 09. A profit of 11.9% within 66 days.
You bought it again at RM107.62 on 30 Jan 09.
Today’s price is RM107.42 if you sell. That is to say currently still losing 0.2%, which is to say within 108 days, the total profit earned is less than 11.9%.
However, if you hold your previous invested gold until today and sell, you could have earned 24.9% (more than double) within 108 days. Well, I’m not saying selling it now (profit of 24.9%) is a good decision as the gold is in uptrend now. Furthermore, not sure what will happen to the US currency now.
Let’s say the gold price jumps to RM116 in a month or two later and you sell it, you will get a profit of about 7.8% compare to previously 34.8%. Assuming if you bought 100g, it will be RM1864 (RM1026 (11.9%) + RM 838 (7.8%)) and RM2997 (34.8%) respectively. Difference will be much greater if you invested more.
Of course this is an analysis of the past and a prediction; the gold price could have been dropped after you sold it in January and went into the down trend. Then, it would be a very good timing but we never know. As long as we are satisfied with the profit, anytime is a good time like in your case.
However from my perspective, I’ll treat gold investment as a long term (a better alternative than FD) which could be a year or so, or even treat it as one of the retirement funds. I believe we will be surprised to see the amount at the time of withdrawal (10, 20 or even 30 years later). Of course it could be the lowest price at the time we sell them years later, then we could have blame ourselves why we didn’t sell it when it is in the peak. If we are really that unlucky (like what happen in 1980s), then you may consider to pass it to your next generation because it is not the only retirement fund we have. (Can a bank do a name transfer for gold account then? Ha). But I still don’t think gold will depreciate as demand will be higher after years.
From the current uptrend situation, if we top up even during the lowest point, there is a big possibility that our average price per gram will be increased. I’m not sure how effective this method is, maybe need to perform another detail calculation to figure it out. What is your opinion?
Hi CK,
The post is #141: Buy And Hold Or Buy And Sell
http://www.unit-trust-investment.com/2008/12/141-buy-and-hold-or-buy-and-sell.html
Thanks for your analysis. Your comments are valid. Sure, if I have hold on to my gold that I have bought at RM86.03 on 28 Oct 08, I will be grinning ear to ear now. A big profit.
However, we will never know what the price is going to be. I would like to take profit when I am at the top. And buy when the price is at a low.
Of course, unless you have the foresight knowing that the price will be at this level now, RM107.42, you would have kept it till now.
We never know what the price is going to be. The price may dip and go down for many months. And your money will be stuck.
I don't want my money to be stuck. That's why I rather buy and sell at a short period even if I get a lower profit.
Another thing, if you take 10,000 and multiply by 10% five times. 10,000 X 10% X 10% X 10% X 10% X 105 = you get 16,105.10.
If you hold it and make 50%, you will only get 15,000.
Nevertheless, markets or gold price don't usually make a big jump of 50% in a year. However, it goes up and down and when you catch the waves at the right time, you will get that 10% five times within a year like I mentioned.
In 2008, gold price started on 2 Jan 08 at USD846.75 and ended on 30 Dec 08 at 869.75. That's a mere 2.7%. Buying and holding sure is not a good strategy here when you see the 2008 chart. You could have easily caught 5 to 6 times of 10% profit.
There is the power of compounding if you make constant small profits.
OK, let's look even longer term. Of course, provided if you hold your gold that long.
In 1979 (30 years ago), the average price was USD306.68. In 1989 (20 years), the average was USD381.44 and 1999 (10 years) was 278.98.
See? If you have bought in 1979 and hold it for 20 years till 1999, you are at a loss from USD306.68 down to USD278.98. And you have to hold it for another 10 years till 2009 to see good profit. But I doubt that you will hold another 10 years or have faith for another 10 years once you saw that your 20 years effort has gone down the drain.
And from the Elliot Waves, if you study it, you can see that once price has reached a top, it can come down to a very low. That can happen in a very long term period. That's why you see a drop in price from 1979 to 1999.
One more thing I would like to add. Gold investment does not reap any interest or dividend if you hold it long term. Your money simply doesn't compound while it sits in physical gold or PBB GIA. The only way your money can grow massively is through the power of compounding. Buying and selling. It is as simple as that. I have mentioned in a previous post. The simple true objective for any investment is to achieve a growth in wealth. The best way and fastest way is to compound your earnings. (http://www.unit-trust-investment.com/2008/12/145-philosophy-of-unit-trust-investment.html)
Again, we never know what is going to be in the future. Who knows? Perhaps one day we don't need any money any more. People will learn to live in peace and work together in a peaceful community and no money is required. What will happen to your gold then? It's going to be just a piece of metal. That's all. Read about the coming 2012 Earth change and stuff like that, Planet X, Nibiru, Pole Shift. If you believe in any of them. We'll never know.
Topping up? You mean Dollar Cost Averaging? It's a fallacy. This strategy is for those who clearly don't know about the market. It's a 'trick' in the Unit Trust industry to get people to invest constantly so that the unit trust companies have constant supply of income. Best to buy and sell. When you have more money to invest, wait till you have sold everything, and want to buy again. Then pool all your money together and buy.
If you are a businessman, would you hold your stock for long term and wait for 5, 10 years for the price to go up before selling it? Or would you sell your stock at a small profit, take the money to buy more stock and sell it and repeat the process? We have to run our personal finance the way a business runs it. That way we will see profit.
Property investors are the same. The smartest one I have seen are usually those that buy and sell. They don't hold it long term unless it generates good rental income. In gold investment, you don't get 'rental income'.
My mom-in-law bought a house to live in and still living in it after more than 30 years. So what if you tell me that the price of the property has appreciated so and so much. It's all only on paper, unrealized profit. The wiser thing to do is to sell it and invest in another better property at a better location. Price of property in Kota Damansara for instance and Bandar Utama too, appreciated a lot if you have sold your old property and bought these. The old property's price has just stop growing much after it reaches a certain age.
Your gold investment is also unrealized profit if you just keep it for long term. You don't see the money. Once in awhile, take some profit out and enjoy a holiday trip. That's what I will do.
There are many other things I can discuss with you on buy-and-sell strategy. Many more examples. I hope you understand my points. :-)
I am totally agree with Carson, reading from you make me gain a lot of knowledge. Keep it up, support you.
Koh,
Thanks for your support!
Hi, I'm new in gold investment. Looking at the graph, does it mean now I better wait for the next buy-in price instead of current price?
I read some articles saying about the best time to buy gold is now. But as I see normally it will come down a lot if it went up too sharply (like recently). Please advice.
PBB seems to allow cash bank in only and no online trading (maybe this is standard gold investment in Malaysia?), which is quite troublesome to withdraw money and carry the money to buy the gold.
Thanks.
Regards,
Calvin Mak
Calvin Mak,
Most articles will always say the best time is "now" without a time point of reference. Tomorrow is also the best time to buy, today is also the best time to buy, everyday is the best time to buy according to these articles. That's how many people got stuck in their investments and lose money.
If you think the price is going to come down, you can wait. I can't tell you when the best time is until I see the price trend and chart at a later date.
However, a good time to buy was when gold price was at USD700 and USD800 level. The price is now at USD940 level, are you brave enough to enter now?
Troublesome it is with PBB, we shouldn't complain about this when it is so easy to make money compare to people sweating under hot sun just to make a few bucks. We don't even have to lift a shovel, eh?
Anyway, you don't have to carry the money. Just transfer the money into your PBB savings account. And then deduct the money from the savings account to put into the PBB gold investment account.
Cheers.
Hi Carson,
Thanks. As I read the chart, probably it will stay above 930 in this week. If I buy now, I think I won’t earn much even if it shoots up to 1000 (through some calculation) which is basically some of the prediction by analyst in this 1~2 months. I think I’ll buy if it drops slightly around 900-920. Otherwise, I think I’ll wait for the next buy in point.
Do you have any recommended website/book about technical analysis on gold market where I can learn? Thanks for sharing...
Btw, I heard that silver is also a good investment currently. Do you know any of these in Malaysia?
Calvin Mak,
You can google on the net. There are many places to learn about technical analysis on gold. I don't have a specific place to begin with.
Silver price movement is too small to make any good profit. I don't know anywhere that you can buy and sell silver like PBB gold investment account.
Post a Comment
Thanks for posting a comment on Unit-Trust-Investment.com.
May you become healthier, happier and wealthier!