The Joys and Benefits of a Fall in the Gold Price

By: Julian D. W. Phillips | Tue, Jan 22, 2008
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Gold Forecaster - Global Watch

Below is a snippet from the last week's issue from:

With the present fall in the gold price to the mid-$800 region, a large number of new gold investors were a little stunned by the fall. But there's no need to be. We feel the opposite; after all, when gold was running up through $900 after taking off at the end of last year from around $810, one may have been forgiven for believing that this price would rise to four figures. But inevitably, such a rise is met by a fall back to where it started from, unless there was good reason for the price going there in the first place. So now we see a pullback of just below 6% to $875 and are delighted. Why? When such a pullback happens it takes the pressure off the buyers because they are covering short positions or have to buy for another reason. Sellers who held off now feel that the price has peaked and they come into push the price down. Speculators run for cover not knowing which way to go next. The emotional buyer or sellers takes stock and tightens their grip on positions or closes them. Once complete this action calms the market down again. All take stock of what the market realities are and what to expect. Then the next move is made for whatever reason. The market regains it health and move on. This is called a consolidation period and gives power to the market to move ahead. With the Fed cutting interest rates by 0.75% in one go watch the market move on from here. We hope you enjoyed the fall, because things may well have changed now?

In India when such a 'spike' in prices occur the first knee jerk reaction is to say "I'm not paying that" and the buyer is sidelined. Many will turn round and say the price has gone too far and stand back waiting for it to pullback. Once it has done this, buyers then return. The pullback after a rise means that a new 'floor' price can be established or a new foundation laid on which both buyers and sellers can feel comfortable at that level because it is a true reflection of demand and supply at present. It is then that long, medium and short-term players will return to the market. This is why it is a joy. Once a consolidation is complete, the fundamentals driving the underlying market dominate pricing, with a rise or a fall in the price thereafter.

Of course the wise player knows where this future 'floor' price will come in a pullback, so will aim to buy on the fall and particularly when the fall seems overdone or overshoots this price. In the knowledge that the price is going much higher, another joy is to buy 'on the fall' [or dips] and watch the price jump up, giving an great entry point and immediate profit.

Many may feel uncertain, but we at Gold Forecaster are talking about in the present and next issue is what the picture going forward really is for the Investor in gold Silver and Platinum. We believe we are at one of the most important junctures the global market has ever seen and we mean currencies, credit markets, precious metal markets all thrown into the cooking pot of the global economy and we are excited!

"The gold price will benefit tremendously from the U.S. rate and tax cuts in the States and the evolving global economy going forward!"

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Julian  D. W. Phillips

Author: Julian D. W. Phillips

Julian D. W. Phillips
Gold Forecaster

Julian D. W. Phillips

"Global Watch: The Gold Forecaster" covers the global gold market. It specializes in Central Bank Sales and details, the Indian Bullion market [supported by a leading Indian Bullion professional], the South African markets [+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $, Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the influential gold price factors across the globe, so as to truly understand the global reasons behind the gold price.

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