Gold At $912.65, I’m up 1,155.05% in About a Year

January 26th, 2008

About a year ago I decided to invest ~$100 in gold using an unorthodox method. Due to the fact that it was (and still is) a risky method to invest, I only put $100 to $150 USD at risk and was fully willing to lose every dime of it… Here is how it works. Using my forex broker, Oanda, I found out that I was able to purchase Gold and Silver on margin. I don’t know if the other forex brokers allow trading of Gold and Silver, but mine does. My original goal was to learn about currencies and do some forex trading. After studying currencies a while, I noticed I could pick up on a long-term trend but had NO IDEA where the short-term prices would move due to government interferences. I promptly decided against trading currencies unless I take a very long-term approach. That’s when I decided to invest in Gold. With all the weakness in the USD, how could Gold or Silver not do well?

I put roughly $100 USD at stake and decided to buy some gold on margin. At first I bought 1 ounce of gold at $627.70. A few days later the price had moved down some more, so I bought 2 more ounces of gold at $612.20. I then promptly left it be, and forgot about that account for many months. Here is how the price of gold has done.

At the bottom of that chart you’ll notice that it says $625. The chart no longer shows way back when I bought. I bought at almost the EXACT short-term bottom, as it just happened to correspond with good timing for me being able to find an extra ~$100 USD… I didn’t time it that way, I just got lucky. I did know that it would be going up long-term and that due to its price drops at that time it wasn’t a bad time to get in near its resistance levels. I just didn’t know if I was buying at the exact right time. Now that gold is at $912.65, here are the results.

I estimate that I bought the gold early in January, though I don’t actually remember the exact date. What I do know is that my profit is reaching 1,155.05% in about a years time. I’ve turned the $100 to $150 into $945.59. I had completely forgotten about this account for over six months. Let’s hope I don’t completely forget about it too long or I may miss a good opportunity to sell!

The fundamental reasons why I love gold are still in play. The Fed is still printing massive amounts of money, lowering interest rates and increasing inflation. The Federal Government is still amounting massive losses and spending far more than it earns, and therefore taking on debt at alarming rates. As long as these fundamentals continue, I like the prospects for both Gold and Silver. I think Silver could outperform Gold, though time will tell. I do expect some consolidation, though it may not yet happen if the Fed decides to interfere some more. With all the recent interference, I’m surprised it hasn’t got to $1,000 yet.

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