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April 08, 2009 | By: Simit Patel |
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With gold falling below $900, many perma bears and gold bugs are asking: what's going on here?
Let's start with the chart below, which shows the past four years of gold's price history. The first level at which I'd look to re-evaluate conditions is $770, which is clearly a pivot point and is also where the 38.2% Fibonacci line is at for the gold rally from $400 to over $1,000.
Personally, I view gold as a bit like saving and investing, and simply accumulate gold when I can, and plan on continuing to do so for the perceived length of the long-term bull trend. However, I may try to add more or take profits around key price levels.
Fundamentally, the long-term case for gold is only getting stronger. Political instability is the key barometer: the more political instability there is in the world, the stronger the case for gold. Our current world, with increasingly vulnerable fiat currencies and controversial fiscal policies, suggests the bull market in gold is just beginning.
Disclosure: Long gold
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