To Buy or Not To Buy

Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes, at essentially no cost. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. Ben Bernanke (Nov 21, 2002) Historically, and based on 35 years of data, gold usually puts in a bottom in March and a top in April. Weve had the bottom in March (on March 18th), and we await a top in April. This top in April usually lasts for several months, resulting in sideways action with a downward bias and another buying opportunity generally in June or July.

Figure 1: 2001

Figure 1: 2002

Having said this, an obvious next question is: Can we count on gold rising to a top in April, or is this a year where we cannot count on historical data?

A study of the

Figure 3: 2004

Figure 4: 2005

following

charts

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does reveal that Gold prices (at least since 2000) generally subside during mid March to mid April and then top out during mid April to early May and remain there for several months.

Figure 5: 2006
A few of the examples from the start of the decade does fulfill our purpose. Now have a look at the extract below:

Figure 6: 2007

Well, this means that so long the supply remains with the IMF and other major Central Banks, gold prices would drive south, but BEYOND THAT..it could be a sky-rocketing investment.

April 2 (Bloomberg) -- Britain wants an agreement from the Group of 20 nations to improve the way the International Monetary Fund uses its cash, including freeing up money for lending by selling gold reserves, International Development Secretary Douglas Alexander said. The IMFs board approved a proposal in April 2008 to sell 403.3 metric tons of bullion as part of a plan to close the Washington-based lenders annual deficit. The Obama administration will push Congress for legislation allowing the IMF to mobilize its stockpile of gold to boost its funds, U.S. Treasury Secretary Timothy Geithner said on March 11. Gold for immediate delivery traded at $905.67 an ounce in London as of 5:47 p.m. local time. The metal gained for the past eight years and is up 2.9 percent in 2009. The fact that IMF has 3217.3 tonnes of Gold means that the IMF stock would deplete more than 10% of its gold reserves. (Source: WORLD OFFICIAL GOLD HOLDINGS; WORLD GOLD COUNCIL, see figure 7).
The spot gold prices have posted a high of $ 967 in late March 2009 (20/03/09, to be precise).Thereafter, the gold prices have been retracingDoes it simply mean a repeat of historical trendswith a tad haste which has been the order of the ongoing crisis.Has the April top been formed .or is it something more??? YOU MAY DECIDE but there is some Food for Thought. Probably an investment opportunity lies your way.

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Source: World Gold Council

Figure 7: World Official Gold Holdings