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The Future of Gold Prices

The One Chart That Explains Gold's Move

Written by Ian Cooper
Posted August 4, 2011

Brian Hicks here. And I've got some urgent information to share with you right now. So you need to listen.

You see about two weeks ago, Angel founding partner Mike Schaefer sent me and Bill Lowe (the other founding partner) an email entitled, "This guy agrees with us."

In the email, Mike sent a link to a story about Ray Dalio, who runs the largest hedge fund in the world. Dalio recently predicted a financial collapse in late 2012, early 2013 that'll make the 2008-2009 crisis look like a day at the pool at the Playboy Mansion....

So yesterday, I had a conference call with Mike and Bill to see what they're doing to protect their wealth. For an hour, Mike and Bill told me exactly what they see coming — and how they're preparing their portfolios not only for protection, but to build even more wealth while most investors lose their shirts.

I don't have to tell you that we here at Angel foresaw the 2008-2009 financial crisis. To prove it, check out what Angel Editor Greg McCoach said in January 2007 on CNBC. Greg was 100% spot on with everything he said... everything!

You can watch the video here.

So why am I telling you about this?

Because I recorded the telephone conversation I had with Mike and Bill. And as you read this, my IT department is converting the audio into a format that you can easily download and listen to on your computer.

This is something you'll want to listen to, because Mike and Bill explain — in detail — the investment opportunities they see for the next five years, including one that I think will surprise you... It surprised me.

Of course, gold was still at the top of Mike's list. He thinks it'll hit $2k within 12 months.

When the "What Are the Rich Guys Doing Now?" recording is ready, I'll let you know...

In the meantime, I've asked supertrader Ian Cooper to conduct some technical analysis on gold. After all, Cooper has recently been on a 40-for-40 run with a 100% win rate in the last five months.

His report is below.


Brian Hicks, Publisher

Gold Will Run to $1,950

As long as the currency is being devalued at the rate it is, gold will continue to rise. No question about it.

As long as gold continues to track the debt ceiling, it will move even higher.

One look at this chart from Zero Hedge points to as much:

debt ceiling v. gold prices 080311

What Isn't Driving Gold Higher These Days?

All we heard at the beginning of the year was that a recovery would take us higher in the second half.

That ain't happening.

There was no chance of a recovery to begin with, but people ate up the notion anyway — and sent the market 600 points higher on it.

Not only is there no recovery, there's a European debt crisis. The U.S. economy is in the doghouse. Consumer spending just fell 0.2% in June on 0.1% estimates.

The ISM index for July came in at 50.9 on 54.9 estimates. And GDP isn't looking too healthy... We're mired in debt worries with an eventual downgrade. We could see QE3 sometime this year, maybe even this month.

Home prices have fallen to 2002 levels. Values in some parts of the country are down some 50% — and it's getting worse.

Unemployment is worse with 14 million people out of work. Inflation is out of control. And there's still a lack of access to credit.

If all that isn't enough to send you to the safe havens of gold, I'm not sure what is...

Appetite for Diversification

It's really no surprise banks are buying gold like it's going out of style.

After South Korea bought 25 tons of the metal for the first time in 13 years, just to diversify from the dollar, it's likely other central banks in that region will follow.

Buying gold not only helps countries protect their wealth; it's the best way for them to prepare for a gold mania that could make the 1970s look like “child's play,” says Franco-Nevada Chairman Pierre Lassonde.

In 1980, the only players, or the dominant players, were the Americans. Today the dominant players are China and India; 58% of all the gold sold this year will be sold in these two countries. When we reach that mania phase… it will truly make your head spin.”

The Best Way to Trade the Gold Mania

To begin with, you can always buy the following on any near-term gold pullbacks:

  • Randgold Resources (GOLD) – a gold mining and exploration company with a focus in Africa; analysts expect earnings growth at an average 53%.

  • New Gold Inc. (NGD) – a company with assets in the United States, Mexico, Australia, Canada, and Chile.

  • Newmont Mining (NEM) – one of the world's biggest gold producers.

  • And Yamana Gold (AUY) – a gold producer with a focus in Canada with land in Brazil and Chile.

But I prefer the SPDR Gold Shares (GLD), which can be picked up at current market prices of $159.50 (price as of Tuesday at 11 a.m.).

Or, if you prefer options, you can always buy long-dated calls such as the January 2012 GLD 161 call option (GLD120121C00161000) at market.

Both should pay off very well after pulling back. And we'll be sure to track them for you.

Of course, it's up to you whether to take my advice or not. But consider that I've closed 180 winners out of 205 trades in less than three years...

Stay Ahead of the Curve,

Ian L. Cooper
Analyst, Wealth Daily


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