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Gold price betrays struggle; 3 options for individual gold investors

How to navigate gold investment minefield when war is being waged

What are the options for individual gold investors when there is a war of words between great investors and Ben Bernanke, probably the world’s greatest central banker?

In the US Congress, Ben Bernanke face-off with Dr Ron Paul where the former famously declared that gold isn’t money but in the meantime notable investors like Jim Rogers say 

When the US Dollar becomes confetti any number you want to make up!

While we are not quite sure whether Mr Bernanke’s declaration is his own opinion or the official stand of the US Federal Reserve, in the meantime central banks are purchasing as much gold as they can put their hands on during this great gold sale.


And then on the price charts where many gold bulls say do not represent price of gold but paper gold price really. Where one should question if 1 – 3 percent price movement over short durations are really normal.

gold price chart

Volatility of gold price visible in 15 minute charts

  1. 20 Dollar (1.4%) move in 1 hour
  2. 40 dollar (~3%) move in 24 hours followed by 80% retracement in 15 minutes
  3. 17 Dollar (1.2%) spike in 15 minutes
  4. Long tailed candlesticks betray the bull-bear struggle


Bullish and bearish gold technical analysis: Which picture to believe?

The bearish gold price narrative

Gold price prints a clear down trend followed by consolidation. At the moment, price resembles a wedge that combined with the previous down move suggests a continuation pattern. Price has clearly completed the wedge and is now retracing to retest the previous support now turned resistance. Once pullback is complete and resistance is assured, price will fall further.

bearish gold price chart

Gold is bearish and will continue down trend

The bullish gold price setup

Gold price action is clearly reversing following a rally in August and subsequent consolidation in September. Price resembles a big inverted head and shoulders pattern which will bring about a bullish reversal following its completion. At this moment gold price is clearly support by a 4-week support (blue zone) that is also past resistance.

bullish gold price chart

Gold is bullish and technical picture clearly reversing

3 options for individual gold investors in times like this

  1. Do not participate
  2. Buy gold for the next generation (throw into the freezer, write off losses and put it out of mind)
  3. Buy physical gold, short the paper XAUUSD (when it falls) to reconcile and all is bright and gay

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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