Canadian Money Forum banner

Too invest, or not to invest.

6544 Views 20 Replies 12 Participants Last post by  dogcom
Good afternoon guys,

I'm relitively new to trading, I've been following it now about six months as in the future I aspire to work in the financial industry and will be going to university within the next 24 months.

I spend alot of time learning technical trading and specifically forex "paper trading" just to get an understanding for financial markets. I spend alot of time reading trading literature and learning about the trading pyche. I also surround myself with veteran traders on a number of forums, IRC, etc, where I gain alot of knowledge.

Over the past 2 months I've been watching the "Gold Rush" and seeing it go from sitting a little over $1,000 USD and then rushing upto $1,200 in quick succession and I'm curious if I should invest into gold. Alot of the chartists (not just bullish people who love gold) suggest it'll continue running untill atleast 1,300 as per technical analysis and of course alot of the bulls have been saying outlandish claims like 3-5k USD over time.

Now, I've spent alot of time trying to understand the US financial markets and have noticed the corrolation between USD and Gold watching the EURUSD FX pair with the USD depreciating. However on Friday there was a hiccup on Gold where it lost it's last weeks earnings due to the release of lower US Employment figures than expected, and also USD gained on almost every pair in FX.

Now, I did notice just before close of play yesterday gold (and also all the FX pairs) had started to go back up as the USD fell close to the end of the days trading. I realise the USD is getting weaker and weaker with the fear of inflation due to the flood of cash into the economy but I also realise there is going to be several fed meetings this month which may lead to higher interest rates.

My questions to you are:

Should I invest $2,000 USD with a leverage of 100:1 into Gold at the moment? I wish to create a 1 year investment that has the potential to earn a good return, and after watching gold this past couple of weeks I believe that it has the potential to do this.

Side note: I realise all investments carry risk, the reason I ask is your current views on the gold market and if its at the top of a bubble or a 5 year bull run we've only just entered into.
See less See more
1 - 1 of 21 Posts
I agree with Berubeland.

Of course gold has the potential to gain in value. It also has potential to fall. Once people start noticing that something's going up and jump on the bandwagon, it's usually too late; you're better off looking elsewhere.

Every autumn, I used to go to the top of a mountain and watch the hawks in migration. There would be a good crowd of other hawkwatchers there, and whenever they were looking at some big eagle or something off in the distance, I always made it a point to look the other way to see what they were missing. I made a lot of good sightings that way, and built up a reputation as a good observer.

I used the same approach when I worked as a journalist, and got a lot of stories that the big crowds of journalists missed. You could read 10 publications and read the same story from 10 different journalists, but my story stood out because nobody else had covered it.

A similar strategy can work in investments. You're better off not running with the pack.
See less See more
1 - 1 of 21 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.