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Gold and Silver Megatrends

December 15, 2010 – The value of studying long term trends when making decisions about gold and silver investments has been stressed here several times before, but the concept is worth revisiting whenever concern is raised over possible price corrections.

For those with short positions, of course, price corrections can be problematic. But today’s trends in both gold and silver hold great promise for long positions, for which corrections are actually beneficial.

One well respected and very successful investment newsletter, The Aden Forecast, bases its predictions on what they call “megatrends,” the long term trend of the moving average of prices. Megatrends take a very long time to develop because they reflect the direction in which changing elemental forces are driving the market. Such trends are extremely resistant to transitory conditions and are therefore unusually reliable predictors. In fact, the superficial conditions most forecasters use are easily overpowered by a megatrend once it develops, frequently driving the market in unexpected directions.

The Aden sisters, founders of the newsletter, are extremely bullish on gold because of its well established but still evolving megatrend, which extends far into the future. As quoted by Peter Brimelow in MarketWatch, they have this to say about it: “The gold price is incredibly strong above $1340 and as long as it stays above this level, we could see higher prices. A decline to the $1300 level would take the froth out of the rise, but even then it would only be an 8% decline. The point is, a 10-15% correction would actually be healthy . . . We expect gold to continue higher in the years ahead as its mega rise evolves.”

Gold’s megatrend and silver’s continued strong performance relative to its moving average make 2011 a very promising year for both gold and silver investment.

Shannon King

Senior Staff Writer – GoldSilver.org

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