fml test today, page-8

Fair enough, prediction noted.

You are not taking too much risk, I would predict the same (FML going up) but for these reasons..

Bullish Force #1:
Seasonal Forces Should Push Gold Higher

Look at this chart of gold's monthly performance over the last 40 years...

Source: http://seasonalcharts.com/classics_gold.html

You can see that the end of the year is usually a very good time for gold. In fact, over the past 40 years, November and December accounted for almost HALF of the year's gains for gold.

What's more, November, December, January and February all tend to see gold end near its monthly highs, on average.

Christmas is a big part of gold's December surge, of course. Many jewelers do more than half of their entire year's sales between Thanksgiving and Christmas!

But it's more than that — it's also the gold buying associated with the Indian wedding season, which lasts from the end of September through December. And once we get into the New Year, the Chinese start buying gold with both hands.

In fact, surging demand from China is already changing the seasonal patterns in gold prices — pushing the annual gold price "peak" from November to February, as gold buying centers around China's New Year.

If current trends continue, the next change may be that February's peak may not be much of a peak at all.


Bullish Force #2:
China's Got Gold Fever

China's gold demand has soared 48% year-over-year, according to the World Gold Council. What's driving this?

China's 1.3 billion consumers are piling into gold as they become wealthier, but that's just part of it. They're worried about rising inflation, and they're wrestling with the same fears we are about economic problems in Europe and America.

And it's not just private Chinese citizens who have gold fever — the People's Bank of China has stated it is diversifying out of U.S. dollars and into gold bullion.

Considering China has $3.2 trillion in foreign currency reserves, that's a LOT of gold!

On the supply side, China's supply from mines is growing. But it's not growing fast enough to keep up with China's rip-roaring demand. Check out this chart from CPM Group that compares China's gold supply and demand...



It's pretty clear that China has a supply/demand squeeze going on.

Bullish Force #3:
Gold Stocks Are Becoming Value Stocks

It's not just gold that holds knockout profit potential. The miners that produce gold are leveraged to the metal, because their mining costs are lower than the price of gold.

With gold trading well above $1,700 an ounce, many gold miners are making buckets of money. That means some great names are trading at less than their net asset values.

And many of these smart miners are now returning that money to shareholders.

The fact is, more miners are paying dividends now. The Financial Post reported that miners' dividend payments are up 75% on a year-over-year basis, compared with a 26% increase in 2010.