Post #4899 by richinmd on the Mechanical Investing board

Investment Strategies / Mechanical Investing

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While cleaning out files on my hard drive I came across this old (2010) "timing" post by Jim. Can't say I ever followed it but with the gold surge maybe it is of value, if it is still accurate.

Rich

I don't buy gold.
But, I have to admit that the price of gold does make an interesting spectator sport.

One of the truisms of gold bugs, that gold is a good stable long term
measure of value, means that it's not going to make you any money if
you hold it forever---so you need a rule of when to buy and sell.
http://boards.fool.com/i-dont-buy-gold-but-i-have-...
Here's a little rule of thumb: The price of gold goes through bull
and bear market cycles, and one of the simplest tests is whether the
price of gold made a new recent high in the last 7 months or so.
(optimal is 145 trading days = about 6.9 months, but why quibble).

"Recent high" has to be defined---I use "price went higher than the
average of the trailing 3-month, 4-month, 5-month, and 6-month highs".

When the answer is "yes, it made a new recent high in the last several months",
the price has gold has risen at a rate of 16.1%/year on average.
That's 73.7% of the time since June 1969.
The rest of the time the price of gold has fallen at a rate of -10.1%/year.

So, sell when there hasn't been a new recent high in around 7 months.
This rule has been bullish continuously since 2001-05-17.
The most recent "new recent high" was 2010-11-09, so you'd need another
one some time by around June 7th for it to stay bullish.

Jim
------

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