My BIG prediction where gold is going!

Johannesburg, South Africa
Timon Rossolimos, Managing Editor Trading Tips

Dear trader,

This year alone gold has dropped over $200. And all those gold bulls you hear on CNBC and in the newspapers are in trouble.

You know I don’t understand these golden bulls. They try to convince you to buy gold and sell everything else. It’s gotten to the point where their EGO is more important than what’s actually going on.

But hold on, with a pompous headline like “My big prediction where gold is going”, how do I differ to the others?

Well, first let give you my prediction and then I’ll tell you why I'm confident about it.

Gold is set to drop another 35%

There are two things I want you to look at in the chart above.

The horizontal black line, at $1,196.31, shows you a strong support level. You can see that gold has been bouncing up and down this significant price in the last five years.

And second, the red line ($707.66) which was gold’s previous support level.

In technical analysis terms, you have what’s called the bull market, which is the up market. You have the bear market, where the price goes down. And you have the consolidation phase.

The 12 year bull market came to an end

You know the saying. Past performance means nothing for the future. This applies to not only with trading but with pretty much everything in life.

(If you can think of anything this rule doesn't apply to, please tell me at the Investorsclub.co.za)

Back when I was in university, my colleagues told me to buy gold because it’s one metal that keeps going up.

I looked at the chart, and they were right.

This is the chart I saw from 2001 to 2008 (While I was finishing my studies at Monash University).

The “everlasting” gold bull run

Looks like a healthy trend? Definitely. It just kept going up.

But commodities, just like any other financial instruments are driven on one thing:

Supply and demand.

As the price of gold went higher and higher, it became more expensive. So, eventually, demand had to saturate. Why? The price of the metal ended up overvalued (overbought), And when this happened, you had to expect a drop in the gold price.

Take a look here to see what happened next.

Gold’s big 42.71% crash in just three years!

In just three years, gold plummeted 42.71% from $1,901 down to $1,089.

Today the supply (selling pressure) for gold is still on. And its momentum is on a one way trip back down.

To make matters worse, the gold price broke through that crucial $1,196.31 support level.

Now that gold has broken below this level, it looks like its next down leg, is on its way.

I expect gold to fall to $707.66 next. That’s another 35% drop from here.

If you’re an investor, I’d leave gold alone as long as the price is in a downwards trend. I’d also leave the gold stocks alone as the JSE-GOLD index follows suit with the gold price.

If you're interested, Click here for the JSE-GOLD index

And finally, I need to mention something quickly.

How does my prediction differ from others?

Sure, I’ve made a big prediction based on technical analysis tools I’ve been using for the last 12 years. But there is a big difference between my prediction and the claims of the gold bulls.

What happens if the gold price miraculously turns back up and breaks above $1,300?

Simple… I’ll swallow my pride, re-analyse the chart and I’ll tell you I’m wrong.

Not only that, I’ll then base my next prediction on my new analysis, considering that gold has changed directions.

I don’t predict on what I feel, but rather on the direction of the trend.

You might call it a crystal ball prediction. I call it a high probability prediction.

If I’m right, then great you would’ve saved yourself from losing unnecessary money from buying gold.

If I’m wrong, I’ll tell you and will provide you with my next probability prediction.

Keep well and always remember,

“Wisdom yields Wealth”



Timon Rossolimos

Senior Editor: Trading Tips
Head Analyst: Red Hot Storm Trader
Author:          94 Top Trading Lessons of All Time

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