What Good is Making Money in Gold?
The market for gold is quoted in Dollars.
You end up with Depreciated Dollars
Or
Depreciated Dollar vs. Euros.
By
James Sinclair
[email protected]

What good is making money in gold? Many international members of the gold community are asking this question. For them, and for the US gold community, this question is quite important. Firstly, the appreciation of gold has already, and will continue, to outpace the depreciation of the dollar. However, that is no reason to take a loss on the currency even if your currency of domicile is the dollar or on the conversion from the dollar back into the stronger currency of the international gold investor. There is no sound argument that would give us a strong dollar and strong gold at the present time. The Euro looks technically bound for the $1.20 range (presently 105) as the dollar looks at least into low .80 in terms of the USDX (presently 101.98). It could go as low as .72 technically.

There is a strong possibility, bordering on a probability, that the US dollar is the real target of the Al Queda war strategy. Could it be that Al Queda knows more about markets than the present administration in the US?

There is a technique that I am using which may well be the solution to the win on gold gain vs. the dollar loss scenario that is inherent in gold. It is inherent in gold because gold is traded primarily in the US dollar. This is also a problem in Rand terms for internal South African buyers of South African gold shares. The solution is simple. For every dollar invested in gold, one dollar should be invested in the Euro. The means to do this without having to tie up huge capital is equally simple. Go long the amount of futures Euros equal to your investment in gold or gold related items. Of course there is risk. The risk in this technique is both gold and the Euro going south simultaneously. This is why stop loss orders are great tools. Going long the Euro is one way of protecting your dollar currency tied up for other purposes. Personally, I like the Euro on its own merits, and am long, planning to increase my position when TA indicated. You will get weekly technical reviews from this point forward on the Euro.

The Simple Steps to Buy the Euro:

1/ Open a commodity account if you do not already have one.

2/ Study the material provided below.

3/ Select that Euro contract that best suits you needs in terms of the size of your commitment to gold.

4/ Do not over-commit. Look at this as a hedge against the dollar and not as a speculation.

5/ Select the degree of risk that you would accept and stick to it as a stop loss order entered open.

6/ Remember not to judge the size of the commitment by the few dollars required to make it. This is good faith money to show that you could settle your commitment called margin money. It is the size of the contract itself that determines the size of what you are doing.

An open order is an order placed with your broker that will remain in effect until you cancel it.

A stop loss order is an order that can do one of two things according to your selection:

1/ When the price you select to stop your loss occurs, your order to sell becomes a market order.

2/ When the price you have selected to stop your loss occurs, your order can activate with a limit. This is called a stop limit order.

I prefer a stop loss order entered as an open order. It gives me peace of mind.