Computer Says "Buy Gold"

Buy Gold says this indicator. It's spied 5 out of 6 bull markets in gold early...

The BULL MARKET in gold is back, reckons Dr. Steve Sjuggerud, writing in his Daily Wealth email.

Now is the perfect moment to Buy Gold. Sentiment is still negative; indeed, a growing section of the investment world hates gold. And we have a hint of an uptrend.

This is exactly what we wait for.
 
In short, things are getting "less bad" in gold. Based on history, I believe we could see enormous gains over the next few months. And our True Wealth Systems computers tell us it's time to Buy Gold.
 
As my True Wealth Systems subscribers know, we track gold two ways. Our first "Gold in Currencies" system tests gold versus four of the major world currencies. The idea is simple. We want to own gold in a bull market. But what is a gold bull market?

You might hear people say, "It's not a bull market in gold... It's simply a bear market in the Dollar." You see, if the US Dollar is crashing against other currencies, it's likely also going down in terms of gold. So it looks like gold is in a bull market. But what if gold is falling in terms of the Euro or Yen while it's rising against the Dollar? That's not a gold bull market.

So what is a bull market in gold?
 
One simple definition is: When gold is going up in terms of all the world's most important currencies, it's a bull market in gold.
 
We used this definition to come up with a simple system for gold. We tested the idea on four major currencies – the US Dollar, Euro, British Pound, and Japanese Yen.

If the average price of gold is up in all four currencies versus the previous month...the  Buy Gold. Repeat the next month. That's it.
 
I know it sounds too simple, but it works. We want to own gold when this system says "buy". We've tested the idea on 40-plus years of data. The results are astonishing.

Take a look at this chart from the most recent True Wealth Systems...

Based on history, buying a double-long gold fund when this system says "buy" is good for 41.4% annualized returns.
 
Yes, that's right. This system returns over 41% a year when it flashes "buy".
 
Importantly, these signals are somewhat rare. Our computers say "buy" less than one-third of the time. Meaning, on average, we'll only get about four buy signals every year.
 
And right now, the True Wealth Systems computers tell us now is the time to Buy Gold and ride it higher.

The thing is, we still don't have the uptrend, based on our "Gold Uptrend" system. I'm not concerned, though – that system is a bit slow to signal. Our "Gold in Currencies" signal can be a great "early sign" of a new uptrend in gold.

In short, based on our historical testing, we could be at the brink of a major breakout in gold, but without a confirmed uptrend as yet. Now, I pored over the data and found an incredible result...

In 40-plus years of testing, we've seen six MAJOR gold bull trades. (That doesn't sound like many. But remember, gold went down, consistently, between 1980 and 2000.) Our "Gold in Currencies" system said "buy" before our "Gold Uptrend" system did at the beginning of every trade except one. (In that case, they signaled at the same time.)
 
In these five cases, our "Gold in Currencies" system signaled "buy" one to three months before the "official" uptrend kicked off. However, being a few months early can "juice" our long-term gains.

The average return on our five gold uptrend trades was 110%. That's an incredible return. However, by following our "Gold in Currencies" system into the trade a few months early, we're able to increase our average return to 133%.

Importantly, every one of these trades was MORE successful because of following the currency system in early.
 
Today, we could be on the verge of another major move in gold. Of course, we can't know if this is the case. But simply based on history, we want to own the yellow metal when our "Gold in Currencies" system says "Buy Gold". Historically, it's good for 41.4% annualized returns, regardless of predicting a new uptrend.

You get the idea – right now is a great time to Buy Gold. It is still a bit hated, and we could be on the brink of a major uptrend.

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Former stock-broker, mutual-fund vice-president and hedge-fund advisor Dr. Steve Sjuggerud is the founder and editor of True Wealth. Launched in 2001 and now one of America's best-followed newsletters for private investors, True Wealth also provides free analysis and ideas in the Daily Wealth email service.

See the full archive of Dr. Steve Sjuggerud  articles.

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