Gold hit a six-week high yesterday, benefiting from US dollar weakness. The inverse correlation between the yellow metal and greenback goes back several years – check out the nearly mirror images on this year-to-date chart. (Bullion is represented by SPDR Gold Shares (GLD) while PowerShares US Dollar Index Bullish (UUP) serves as my proxy for the US dollar.)
Gold is not for everyone. It’s a commodity with wide, erratic price fluctuations. However, for those who can tolerate volatility, an allocation to gold can help serve as a hedge against inflation, financial crisis and social unrest.
My newsletter’s gold timing model flashed a buy signal yesterday, its first venture back into the metal since July 24. It’s not clear whether GLD’s intermediate-term uptrend will have legs, but the risk-reward level is more favorable now than it’s been in several months.
This month marks the 30th anniversary of The Mutual Fund Strategist newsletter’s gold timing model. You can see in this archival copy of page 2 of our October 1984 issue that gold started out on a sell signal. Those were the days…. snail mail newsletters, telephone hotlines, and money market funds yielded over 11%!
♦ Please note that my readings will change without notice, so please don’t buy or sell solely based on anything you read in this blog. ♦