How to Handle Gold’s Sinking Crisis?

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Gold movement was advocated as one of the most significant observations last week.  I have mentioned that gold price movement will greatly depend on USD movement. If the USD movement is contended within side way of its channel, gold will move sideway accordingly. However, last week, USD has unexpectedly move up above its immediate previous height. And therefore, causing gold to drop back down below its previous low accordingly.

I believe the main reason for the USD resuscitated strongly was due to the good prospective of the trade war reconciliation between the US and China reportedly. Both the US equity market and the dollar enjoyed the boost by such positive news. 

The Dollar rose suddenly due to trade war positive sendiment.

Possible Gold Future Direction

According to reports, the US and China are going to sign the first round of trade negotiation agreement by December 2019. If these two countries materialize with their signatory show case, world trade economic out look would change drastically. Gold will continue to lose its recovery strength.

However, between now and then, many twist and turn can happen. That’s still a long way to go before these two countries sealed their presidential signatures. There might be possible disruption as we can still hear different opinion about such development; Such as, the President Trump has just clarified last Friday that he did not promise to roll back the tariff against Chinese import.

 This situation makes gold investors scratch our heads. The question is what shall we do now?

As I have also mentioned before, if you want to invest in gold, you got to have a long-term view plan to fight this battle. Gold is obviously down trending at the moment; We thought it has broken its down trending resistance previously, but in reality, it is not true. It was just merely forming another new lower height and lifted the down trending slope angle slightly higher. Unfortunately, the last drop created another lower low which means the bearish trending is still intact. But we do not know whether it has touched bottom or not for this round. 

Gold price’s recent drop affirmed its down trending direction but has decreased its dropping rate.

Investor’s Response Suggestion

There are a few decisions you can make right now when market opens on Monday; first, you may top down on Monday if your fund is already badly in negative territory, says negative 7% to average down your average price. Secondly, if your fund is not in negative territory, particularly true if you have invested longer time, you may do nothing.

Then, wait for gold price to rebound back to near 1480, you can have 2 kinds of decision to choose; first, you may switch out entire gold fund investment if you believe that the two countries will be inevitably sign such trade war settlement agreement soon.

Secondly, if you don’t think such trade agreement will bring any significant improvement for future economy globally or might not even happening soon, you may just switch partially, say half or slightly more than half away, so that you can switch the same amount back in the future when the right time comes. This decision will lower your loses this round and enable you to capture profit if there are any changes in the political development.

If you already have a long-term battle view in place when you entered gold, and you have plenty of bullets ready to shoot (to lower your entry price when needed), you may not do anything at this point. Who knows, thing might change any time and anyhow?

The most important point is, this is not the right time to switch away any of your investment because gold has just dropped to its worst. Remember, you got to train yourself to have a reverse psychology in investment: Buy in the worst time, sell in the best time.  In this way, you can minimize your loses, if not for more profit as a strategy.

 Happy learning how to monitor your investment!

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The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions.  This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to conclude individual decision.

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