Why Gold Will Be The “Once In A Generation” Trade of 2014

You know what one of the biggest regrets I hear people talk about?

It is missing out on huge investment opportunities of a lifetime.

Most people tell me how they wished they had bought tech stocks like Apple dirt-cheap at $8 just after the “dot com” crash. Or that they should have bought gold when it was under $300.

I believe that in 2014 we will have another incredible “once in a generation” opportunity, as I’ll show you.

But first let me tell you why most people miss out on these opportunities.

The most obvious reason is that we humans are irrational and emotional creatures.

When a stock or asset is being hated by the majority, few people are brave enough to pick up those assets at ultra-low prices.

In my experience, most people behave as part of a “herd”. They want to know what “other people” like themselves are doing so they feel good about their own decisions. Psychologists call this “confirmation bias”.

It is the irrationality and ignorance of the 95% that will provide all the cash to keep banks and the financial industry in business – and why bubbles and crashes will persist for decades to come.

In 2014 we will come close to a once in a generation opportunity to buy precious metals like gold and silver. Take a look at this chart:

Gold has re-visited its June lows just under $1200. If gold can manage to rally and close above $1300 (point B on the chart), this is the first sign of a shift or reversal in its downward trend.

However, I would not get aggressively bullish on gold until it can close above $1400 (point A). This would then indicate a “double-bottom” reversal pattern – which is a strong indication of higher prices.

A similar situation is present for silver, which is closely correlated to the price of gold:

Silver would need to close above $25 (point A) to confirm a “double bottom” bullish reversal pattern.

Personally, I am still doubtful that we have reached a bottom in gold. Timing cycles seem to indicate that a drop to $1100 is likely – just enough to scare people into selling their gold before it finally bottoms out.

That’s not all.

Fitch ratings agency recently said that gold has lost its “safe haven” status in the eyes of investors.

More people are pouring into stocks which have gained almost 29% this year (in the S&P 500). I believe that this migration out of gold and into stocks will continue in 2014.

However, if you like me have a long term view on gold, and are waiting for a great opportunity to buy precious metals at incredibly cheap prices, then 2014 will provide you just that opportunity.

Most people will miss out on this opportunity until it is too late. Right now they are too busy listening to the “bad news” about gold. Just like how they listened to the bad news about stocks in 2008 and 2009, and missed a great opportunity to buy them cheap.

Good investing!

Alessio Rastani is a stock market trader at www.leadingtrader.com