How gold helped fund Marko's European holiday - even as the gold price dipped 8%
If you've been reading the news for the past month or so, you'd have seen the significant drop in the gold price.
If you'd invested in gold at the beginning of 2015, you'd be 8% down now. In fact, gold has dropped almost 10% is the past month alone.
Not to mention, the gold companies on the JSE have taken a huge knock due to the decreased gold prices. So, many gold-loving investors are currently sitting on a loss right now.
But my colleague and man behind our Forex Trader service Marko Ras, not only analysed the signs of gold's decline, but waited for the right opportunity to profit from it.
And I'm happy to say, he's making a killing right now.
So I caught up with Marko when he got back from his gold-funded holidays in Europe, to explain to you today, how he managed to reap the rewards from gold's decline.
Here's his analysis…
Analysing gold on a technical basis:
1. Since 2011, Gold has been trading in a downtrend. I always trade in the direction of the trend so I was looking for short (sell) entries.
2. Gold broke through the support line of a symmetrical triangle formation to the downside. This was the perfect time for my entry trigger.
3. My broker's speculative sentiment index indicted that for every three traders that had long (buy) entries on gold, only one trader had a short entry. So I used this as a contrarian indicator and traded against the crowd. This supported my idea to go short.
Analysing gold on a fundamental basis:
1. It's important to note that I shorted gold against the US dollar. The current expectations are that, later this year, the US will hike its interest rates for the first time in seven years. This means the US dollar will strengthen across the board and put downward pressure on gold and other commodities.
2. The global economy is slowing down, which means less demand for commodities.
3. The week prior to my entry, China released its gold reserve statistics. China revealed it has a lot less gold reserves than the market originally thought it owned. This means less demand for gold and it puts more pressure on it to the downside.
4. Gold is used as a hedge against inflation. There's very little inflation in the developed countries, so less gold is needed as a hedge.
5. When there was risk in the markets, including the Greece debt issues and the fall in the Chinese equity markets, gold didn't react to the upside. Usually, when there’s volatility, gold should increase in value.
Still more gains to come
I had a bit of luck with this trade. Late last Monday night whilst most people in the western world were sleeping or enjoying their Sunday, someone in China sold a truck load of Gold.
This saw the precious metal move significantly to the downside. So by shorting gold, I woke up with a huge gain in my trading account.
I haven't closed the trade yet and have added to my position. I'm currently up more than 5,000 points on the trade.
Just take a look at the graph below...
If you want to follow more of Marko's trades, take a look at his professional trader service, Forex Trader. Traders who followed this system from January could have already banked 160% in net gains this year. https://pickinguploosechange.fspsecure.co.za/