8 Reasons Why Gold Should Continue Much Higher...!!!!!!!!

Syeikh Abdullah Awwad Juhani 

Gold
Meanwhile, gold continues to form a constructive base. As we have said on various news appearances (FOX, CNN, etc), with all the quantitative easing going on in the US, UK, and Europe, gold should find its footing then move higher. The question is how long the current basing period will last before gold resumes its long term uptrend. Some investors may elect to wait for further constructive price/volume action before buying. Others may elect to pyramid into gold ETFs such as GLD and DGP slowly, letting the ETF prove itself on a price basis before adding more to their position. Note, the uptrend in gold began in 2001, so its long term uptrend is now in its 11th year.


The top 8 reasons why gold should continue much higher:
1) Global demand for gold is at near-record levels. The two key markets are India and China which together account for 52% of total bar and coin investment and 55% of global jewelry demand. Moreover, Indian and Chinese demand in gold grew 38% and 25%, respectively over Q2 2010. After the US debt downgrade, the Chinese complained about US debt, so it is likely the Chinese will continue to buy gold to gradually move away from US treasuries. And India is potentially an even bigger player than China in gold investments.


2) Indian and Chinese demand in gold is likely to continue, due to high growth rates and high levels of inflation in both countries.


3) The impact of the European sovereign debt crisis, the downgrading of US debt, inflationary pressures, the continuing devaluation of major world currencies via quantitative easing/money printing, and the potential for another recession in debtor nations (U.S., Europe, U.K., etc) are all likely to drive high levels of investment in gold for the foreseeable future.


4) Central banks around the world are likely to remain net purchasers of gold. Purchases of 69.4t during Q2 2011 demonstrated that central banks are continuing to turn to gold to diversify their reserves.


5) Gold is a safe haven when investors get scared, ie, the fear trade.


6) Stagflation (high inflation, low growth) in the U.S. is in the offing. Remember how well precious metals did in the 1970s? Gold is not just a safe haven but also is a hedge against inflation. As more money gets printed, the higher gold will rise.
7) We are witnessing a worldwide secular gold bull market vs. a U.S. centric one back in 1980.


8) Nothing substantial has been done to address the debt problems in the U.S., U.K. or Europe.
We remain long term bullish on gold. Money printing/quantitative easing could prop up stocks, but we could also be in for a period of stagflation where stocks lay limp or remain shortable, so we will let our Market Direction Model, which measures the buying and selling pressure in real-time of leading stocks and major market indices, guide our long and short sale investments in stocks and ETFs.