Gold hits another record

The gold price has again hit a record on Friday, getting closer every day just over a threshold of 1,480 dollars an ounce.

Main factors leading to this historical rise were; the worrying situation of some of the member countries of the European Union beset by serious difficulties with their internal debt and sustained rise in inflation.

The price of an ounce of gold has risen to its latest peak on Friday in the international market, by breaking the previous Monday record.

According to the Analysts the investors in Greece, Portugal remained concerned over the threat of default, a situation that encourages them to buy precious metals, which are the safe-haven assets.

 The debt restructuring in Greek, Ireland also raised the new concerns and hence the raise in the precious metals.

On Friday, ratings agency of France lowered the rating two notches in their country alone.

Another main reason for this rise is; the Investors are alarmed of the signs of runaway inflation. Many European countries afraid, that their local market gold price will be in raise compared with the expected price in China and India. The sovereign debt and the inflations of some of the countries are the main reason behind the rise.

Because of the market instability, threat of default in certain European countries and inflation kept the precious metal price on its present high. You have put eye on the market trend for few more days to predict the trend of the precious metal.

Gold is likely to top in 3 months

Gold, it seems it is likely to be topped out in coming months between 1250 and 1300. Technically speaking, since 2006 Gold is in a expanding pattern. The first top formed on 2006, followed by the next on 2008 and the present top is likely to be formed on 2010.
In a expanding triangle, the first upside leg is followed by a first downside correction and it will be followed by the second upside leg by the second downside leg. The second upside and downside will be bigger than the first upside and downside legs. The third would be bigger than the second one.
The present technical setup of Gold shows, it is in the third upside leg and it is likely to be followed by a third downside leg and it would be the big downside in last 4 years since 2006. If that happens then Gold is likely to fall towards 900 USD in another 1 year.
Any market has see a bull and bear market. We have already seen bull market. So surely there will be bear market in Gold also. No one can take the rally in Gold as granted. Investments in Gold and related products should be avoided at this juncture.

Has the Gold prices topped out?

Ever since gold made a high around 1220 USD, it is declining from that level and recently it touched a low around 1050. Is this the high for another 5 years? or will it rally again above 1220 to make a new high in coming months? This is a million dollar question right now?

Almost all the fund managers and Analyst are bullish on gold and they are advising their clients to buy gold as investments. The consumption of Gold by China has exceeded the consumption of India. And it is being stated as one reason for the rise in Gold. And also it is been said by Market pundits that many central Banks would also start buying Gold for hedging purposes.

Irrespective of this, what does Technical Analysis say about future price of Gold. Technical Analysis would really predict the future course of the Gold Market. We have seen in many Markets, the top would be formed, when everybody is bullish. So once everybody has invested in Gold, surely the prices are going to decline. No market would continue to rally or decline forever. The markets need to consolidate while rallying or declining.

As the same case, the Gold market has to top out somewhere now or then. But going by the technical analysis, it says a top is already formed. So, in the future, Gold is unlikely to move above 1220 at least for another5 years. From here, it is going to decline further towards 800 USD in coming years.

Be careful when it comes to investing in Gold.

Will the downtrend in Gold continue?

Will the downtrend in Gold continue?

After testing a high of 1226 USD Gold has reacted from that high to test a recent low of 1100. A 126 USD decline is a significant decline from the high. Such a decline in the past 6 months was not seen.
Previously I have been advocating that we are developing a ‘Gold Bubble’ and it about to burst. Will this decline foretell the end of the bull Market in Gold.
One of the famous tools used by Analyst to forecast free Markets is Elliott Wave Principle. Based on the study using that tool, it points we are in the fifth wave of a impulse, which means we are in the last leg of the bull Market.
According to the theory, If this is going to be the last leg of the bull Market, then we are going to see a big decline for another few years to come.
Ok, If 1226 is not the top, then what will be the Maximum target for Gold. Yes, based on Elliott Wave principle, we can derive a target of 1400 USD in another 6 months period.
Whenever a commodity is largely discussed in Media, then that would mark the significant turning point of that Market. Gold is being discussed in all world media and it is the only commodity which is in limelight for the past one Year.
Last when Crude oil Prices were peaking, the same story happened. Media covered Crude oil daily and their focus was on Crude oil with analysts predicting 200 to 250 USD as price Target.
Now, the same thing is happening in Gold.
Let us wait and see whether History repeats itself……………..

Which is going to be the next Bear Factor?

Which is going to be the next Bear Factor?

The late 1980s bear market in the world Stock Markets were fuelled by the Gulf war and failure of East Asian Economies like Malaysia, Singapore, Hong Kong and etc. The bear market sustained till 1998.
The early 2000s bear market was fuelled by the dotcom bubble burst and also by the terrorist attack on WTC in USA. Then it terminated only on 2003.
The 2008 bear market was fuelled by real estate bubble, which impacted heavily the USA and also the World Economies. Since then it has pared some of it losses but still vulnerable for another bear attack.
If so, then which is going to be the biggest factor for the next bear market. May be it is real estate itself. As I believe the real impact of the real estate bubble is yet to be felt.
Another possible factor could be a Gold asset Bubble. Peaking Gold prices would lead to Bubble in days to come.
Let us wait and see…

Which is the long term Investment bet? Deposits,Gold, Stocks or Real estate?

Which is the long term Investment bet? Deposits,Gold, Stocks or Real estate?
During the 20^th century, investments in the real estate showed steady returns. Sometimes the price rise is fast and sometimes it is slow. But the rate of return is some what better than the Fixed deposits and also above Gold. But is somewhat riskier than fixed deposits.
Likewise, Investments in the Gold also showed good returns and at times it is stagnant. It sometimes performed better than fixed deposits and at times it is under performed when compared to fixed deposits. But is riskier than fixed deposits.
Investments in the Stocks is the riskiest of these investments. But the returns were phenomenal during the Bull Market and it showed negative growth in bear markets. But on Average, it performed better than other investment avenues. But the risk factor is much more in Stocks.
My investment plan would be to invest 30% in Stocks, 30% in Real estate, 20% in deposits and 20% in Gold. Any investment plan should take into consideration atleast 5 years time frame. And the best way to invest is to invest at bear markets.

Is a Bubble building in Gold?

In Financial Markets, herd mentality is in work. Investors always go by the herd.
Last year, they chased real estate and property prices shoot up world over and investors bought properties as though there is no tomorrow.

So, this effectively set up a stage for impending financial Bubble and that happened. Property prices fell all over the world. Many caught in the melee. Banks went bankrupt. Companies went bankrupt. Individual went bankrupt.

But still, herd mentality is in work. Now, the people are chasing Gold assets and it has effectively set the stage for the next financial Bubble, that is ‘Gold Bubble’.


Financial Bubbles are created when all of the investors who are interested in a particular asset want to get hold of it. Once the buying potential recedes, then a huge selling potential is created. Once prices start coming down, panic selling by all the investors push down the prices beyond its intrinsic value. This is how financial bubbles are burst.


The present price rise in gold reminds me of bubble is being built in it. It is likely to burst in another six months. The same story will happen again. Banks will go bankrupt. Companies will go bankrupt. And individuals will go bankrupt.

Let us see, if this happens shortly.