Buying gold, gold exchange traded funds, and gold futures have all allowed traders to ride the bull market on gold to a more than eight fold increase in the last dozen years. However it is in selling gold that the success lies.
Gold is no longer coin of the realm so if you need money for remodeling your new home, travel, paying for a college education or two, or simply investing in stock, bonds, or real estate, selling gold is necessary to pay the bills.
Long term investing in gold has proven to be profitable if the term is not too long. For example, after the Nixon administration took the US off of the gold standard in 1971 the price of gold rose from $32 an ounce to over $600 an ounce by early 1980. The right time for selling gold was, in retrospect, early 1980 before market sentiment changed and gold fell into the $200 an ounce range where it remained for twenty years. Many who used sound fundamental analysis as well as technical analysis tools like Candlestick charts were able to profit by accurate anticipation of the end of the gold bull market of the 1970s.
Buying gold is done with currency and in selling gold one receives currency. For many, investing in gold is a bullish play on currency trading. Rather than trading currencies, one versus the other, one trades a commodity, gold, typically versus the dollar. The problem with gold is that it does not produce a dividend yield like dividend paying stocks do or interest like bonds or a savings account. On the other hands short term traders can profit whether gold, gold futures, oil, oil futures, stocks, stock futures, or stock options go up or down.
Traders need to keep an eye on the fundamentals of buying and selling gold but traders know that the markets quickly discount fundamentals. Periods of economic uncertainty lead to market volatility. Market trends turn around in market reversal. With time honored tools such as the easy to read signals of Candlestick analysis traders can anticipate market turnarounds and profit from both buying and selling gold. In fact, there was more money to be made in the last years by buying gold and selling gold at the right times than by holding gold bullion purchased at the beginning of the bull market. With the use of Candlestick patterns and Candlestick trading tactics traders can successfully anticipate movement in any market and profit thereby.
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