MAYBANK GOLD SAVING ACCOUNT (MALAYSIA)

Gold Daily Update – Thursday 20 October 2011

>> Friday, October 21, 2011

Market Commentary
Gold eased overnight, opening at 1621.25/1622.25, before settling into a tight range following mixed economic data. After trading to an intraday high of 1626.50/1627.50, the metal slipped down to a low of 1603.50/1604.50 as equities and base metals retreated. A steady recovery throughout the afternoon took us to a close of 1613.00/1614.00.

Technical Commentary
Gold is completing its fourth consecutive down day at current 1620. This latest move has travelled from 1694 to 1604 so far. We see initial support at 1596 from the October low, and then 1538 from the September low. We are bearrish while the metal holds below key Fibo level at 1684

TECHNICAL ANALYSIS


Pivot – USD1,629.52

 

Primary Support (Buy) – USD1,593.80

*BUY = Buying more Gold to Maximum your investment.

 

Primary Resistance (Sell) – USD1,655.08

*SELL = Selling your GOLD investment to gain Profit.


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Monthly Report: Swissgold prices fall along with Silver in September 2011.

Why Swissgold prices fell sharply along with Silver in September 2011??

Prices are now consolidating at higher levels, but the outlook is mixed, we still favour Gold and Silver!

  • The rally in the dollar is a sure sign of a pick-up in safe-haven buying – we think Gold will benefit from this now the initial sell-off has run its course.
  • The EU debt crisis looks set to come to a head soon – when it does the fall-out is likely to be bullish for Gold.
  • The net long position in Gold has fallen significantly – the market no longer looks overcrowded.
  • If Gold heads higher again, then Silver may have a lot of catching up to do – the Gold/Silver ratio is last at 1:51.
GOLD PRICES CONSOLIDATE AFTER A 20% CORRECTION – NEAR TERM UPSIDE FAVOURED.

Gold prices peaked at $1,921/oz on 6th September, they have since undergone a significant correction that took prices down to a low of $1,532/oz - a drop of 20%. Prices are now consolidating around the $1,650/oz level. The bears who had viewed Gold as a bubble market now probably feel vindicated. However, while we can see why some longs needed to take profits, we also feel that the arguments for holding Gold remain strong. Therefore we expect further price gains in the months ahead – although the next run higher might also signal the beginning of the end of this phase of the bull market.

THIS TRADING PATTERN HAS BEEN SEEN BEFORE.
We would say Gold is just repeating the pattern we have seen many times over the past decade, whereby a broad base sell-off initially carries Gold prices down as liquidation selling overwhelms the safe-haven buying. The secondary reaction is then to see safe-haven buying dominate again. Indeed, given we have noticed this pattern, others will have too, so safe-haven buyers probably now know it is best to wait a while - let prices really sell-off before buying again. The spike lower in prices on 26th September was caused by another hike in margin rates, which no doubt forced even more long liquidation – but that may well have now got the last of the weak longs out. However, after the volatility and with a far from perfect chart picture, buyers seem to be in no rush to return. There has been some buying, which has lifted prices $120/oz off the sell-off low, but follow through buying has yet to emerge.

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20 REASONS TO OWN GOLD

1. Practicality: Gold is still by far the optimal choice for most investors


2. Protection: Likely ruptures in the stability of the U.S. dollar standard


3. Profit potential: Gold prices will eventually peak well above $2,000/oz.


4. Inflation hedge: The most powerful factor affecting gold is monetary inflation.


5. Supply/Demand: 2009 gold supply/demand dynamics: irreversible changes.


6. Low risk: Gold’s downside risk is paltry compared to the upside potential


7. Privacy: Numismatic coins offer private ownership benefits over bullion


8. Central banks buying gold: To diversify reserves away from U.S. dollars


9. China: Chinese quietly buying gold / commodities to hedge U.S. paper


10. Secular Bull Mkt: Shortest commodity bull market 15 yrs, longest 23 yrs


11. Gold is money: Gold now accepted as 4th global currency (with $, Eu, Y.)


12. Gold going mainstream: This is still a relatively stealth gold bull market


13. Good timing: Investors should not worry about good/bad gold entry points.


14. Commodities an accepted asset class: For the first time in recent history


15. Price corrections: A sure sign of a healthy bull market, buy on the dips


16. Geopolitical risks: Gold/oil prices reflect rising nuclear threat


17. Gold you hold in your hand: Numismatic coins or bullion are best


18. ETFs: Gold gaining strength from ETFs, corporate and pension money


19. No gold bubble yet: 5-7 years out could launch gold above $5,000/oz.


20. True value: Regardless of what the media says, gold offers true value

THE HISTORY OF GOLD

While bits of natural gold have been found in the remains of inhabited caves dating back as far as the Palaeolithic Era around 40,000 B.C., there is some agreement that gold was first used as adornment in the temples of ancient Egypt. Interestingly enough, gold was not used as money at that time. Instead, the ancient Egyptians used barley as their exchange medium. By the 7th century B.C. gold was used as money in Lydia. Gold has been used for ornaments and decoration and as money for over 5,000 years. Gold leaf has been used for the decoration of tombs and statues, cathedrals and temples, fine books, and picture frames since Egyptian times. Many Egyptian burial cases, including King Tutankhamun’s (1352 BC), were overlaid with beaten gold (called gilding). Gold leaf is still often preferred for adorning the domes or ceilings of buildings (such as the Metropolitan Opera House in New York) because its resistance to corrosion means that it will outlast paint by many years.

Gold was made into jewellery long before it was used as currency. The earliest gold jewellery dates from the Sumeric civilisation around 3,000BC. For centuries, gold has meant wealth, prestige, and power, and its rarity and natural beauty have made it precious to men and women alike. Owning gold has long been a bulwark against disaster. Many times when paper money has failed, men have turned to gold as the one true source of monetary wealth. What is gold and why is gold so important?

Gold is a rare metal. It has the chemical symbol Au, named after Aurora, the Roman goddess of the dawn. The purity of gold is described by its ‘fineness’ in parts per 1,000 or by the carat scale which is parts per 24. The word ‘carat’ derives from the Italian carato, Arabic qirat or Greek keration, all meaning the fruit of the carob tree. Ancient traders used carob seeds as the means to balance the scales in oriental bazaars. Pure gold is 24 carat or 1,000 fine. The price of gold and other precious metals is quoted in terms of troy ounces. The term ‘troy’ is derived from Troyes, France, a major trading city of the middle ages. One troy ounce equals 31.1 grams.

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