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“Invest for Profit 2019Blueprint”
Turn R10,000 Into a
Gold in rand terms R60,000 per kg higher than this time 2018!
Looking at this chart you’ll see rand gold is R60,000 higher than this time last year.
Two events this week pushed the gold price higher:
• US Fed meeting to decide on interest rates – The US federal reserve bank is meeting to decide on interest rates. Whilst it was earlier thought rates would increase the markets now believe interest rates will remain steady. Steady (or lower) interest rates is a positive for gold. If the long term expectation changes to one of steady or lower interest rates more upside for gold is expected.
• Tensions between China and the US are escalating – The CFO and two affiliates of Huawei have been charged with fraud in the US. This has escalated tensions between the US and China further amidst talks of an end to escalating trade wars… As long as this kind of uncertainty remains more and more investors flock to gold as a store of wealth and security. Considering the continued Brexit drama as well – it looks like upside remains for gold…
Could this be the start of a new bull run for gold?
After dropping to a new low, upon low following its brief stint at $2,000 it looks like gold could be at the start of its first uptrend in years.
A US based report suggests this could be the case.
You see, gold’s price can be majorly affected by traders…
As traders buy more and more gold, its price rises.
As they sell gold, its price falls.
Now the report I’ve discovered shows the levels of trader buying and selling of gold. It is called the ‘Commitment of Traders’ report.
Based on the COT report, we see that the downside in the gold price is extremely limited.
How can we know? Look at the positions of the largest market participants (middle pane). The number of long contracts is at the lowest point in 9 years (red bars). This is not only historically low, it is even exceptional. It suggests that the downside in the gold price is extremely limited.
As traders again start piling in and buying more gold from these levels where they own very little – the gold price could see an exponential increase.
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My favourite way to take advantage of a rising gold price
If gold rises from here to say $1,600 that’s a 23% or so rise.
That’s good – but you can make more.
Take for example a gold mining company that produces 100,000 ounces of gold a year at $1,000.
At $1,200 it’s annual profit is $20 million. At $1,400 it’s annual profit is $40 million and at $1,600 it’s annual profit is $60 million.
Simply put – a 23% rise in the gold price could see some gold miners increase their profits by 50%, 100% or even more!
I’ve tipped just such a gold miner in my latest report to Red Hot Penny Shares readers.
This company just completed a new project that will increase its annual gold production by as much as 50%. It’s also grown production at one of its mines significantly in the past year. And it’s set to lower mining costs as well.
All this, together with a rising gold price, will lead to an incredible year for this company…
Here’s to unleashing real value,
Editor, Red Hot Penny Shares