So did you miss the bus?

On 28 August 2009 Investorstreet suggested a BUY on Gold keeping in mind the Chinese Gold Cycle.

Had you invested in Gold as on that date, you would currently be sitting on a return of 39.72%, which by no means can be termed as an average return on any investment, even equity for that matter.

So did you miss the bus?

Gold does it AGAIN...

Gold does it every year and it is doing this again. It follows the yearly "Chinese Gold Rush Cycle" and shoots up during a 4 month period every year. This starts sometime in September every year, before the festive season in India and continues till the end of the Chinese New Year.


A previous post on Investorsteet stated this last year when gold was doing what I call "A habitual affair". This year, it is expected to finish the cycle during the 4th week of January and it is already at USD 1053.31 per ounce (Source: www.goldprice.org)

The average annual change in gold prices (in USD) has been 17.1% during the period 2004-2009 with a positive change in any given year.

Time to Sell Gold

At times like these conservative modes of investments are grabbing investor attention and gold certainly has been every one's historical favorite. RBI has now allowed banks to accept gold in any form from the public and pay interest on it in a bid to reduce the country's dependence on gold imports. The recent slump in the equity markets is another reason why Gilt and Gold investments have picked up.

But gold has probably overshot more than it can digest and would see a steep correction in the coming weeks. The yearly gold rush cycle starts in mid September and goes on till mid February (A little after the Chinese New Year). This year's cycle ended around the 19th of February 2009 and in less than 2 months, gold has appreciated by 32%. GETFs shooting down is another sign of this. So right now would be a very good time to book profits and exit any short term positions in gold. Post correction, it can be gathered again starting mid August till early October.

Time To Buy Gold

Caught in the middle of a roar to gather cheap buys and Crude positions, Gold seems to take the back seat most of the times in the mind of a regular investor. Apart from European and US traders and those in China in the 3rd quarter before the Chinese New Year, very few seem to be actively interested in Bullion when there are more handsome avenues to make money.

Recently, Gold has been range bound between $800-$850 and a fact that almost everything is benchmarked to the dollar means that as a consequence of dollar weakening, Gold prices rise and vice-versa. In the current context, if hurricane Gustav hits the Northern US Gulf coast sometime on the 2nd of August, 2008, then it can push crude prices up and consequently affect Bullion. With oil prices expected to see an upside in the coming weeks, this could be a good time to gather Gold in phases.

Though the near term scenario for Gold is weak, buying in now in phased corrections can be beneficial. With the Indian festive season approaching, followed by the Chinese New Year, this is the ideal time to gather Gold and sell it during the Chinese New Year. The Global demand for gold every year peaks around the Chinese New Year.
So buckle up and go Gold hunting…