Trend Follower Buys Gold

Because last week it gave a trend following 'buy' signal...

THREE WEEKS ago, one of my readers asked me if it was time to jump back into gold and gold stocks, writes Michael Covel in Addison Wiggin's Daily Reckoning.

My answer was "we're close, but not yet."

My answer of course wasn't based on what I thought gold would do next. It wasn't based on what I thought the Fed would do...or on any kind of economic forecast.

That's all useless information.

Instead, my answer was based on the only piece of information you'll ever need in order to make money...

I'm talking about the price action.

Three weeks ago, my system had not triggered a buy signal.

But now we have a different story.

My system last week triggered a buy signal on both gold and gold stocks.

Why are gold and gold stocks finally rallying?

I don't know why exactly. And I couldn't care less.

All I know is that, based on the recent price action, this could be the beginning of a new long-term trend.

Every quarter we're bombarded with earnings estimates and growth projections from thousands of different companies.

We're bombarded with financial news and predictions of what the Fed will do next – and projections of GDP, unemployment, inflation, and other economic data.

Not to mention the hundreds of so-called investment gurus contradicting each other. Some saying gold will go to $5,000. Others saying gold will go to $800. With all of that gobbledygook clanging around inside your head all day, it's really easy to get confused.

No wonder folks can't keep up. With all the noise, many end up losing tons of money constantly chasing the next great tip (which often comes the very next day).

But the truth is...you don't have to drink out of this fire hose of useless information.
Investing doesn't have to be complicated.

Einstein once said, "Everything should be kept as simple as possible, but no simpler."

That's why trend following wins.

It filters out all the noise of the financial markets and focuses on the only thing that matters: trends.

In fact, you could make money from trend following even if you were on a desert island.

All you would need is one piece of information: the price.

Josh Brown works with my friend Barry Ritholtz. He recently wrote a brilliant article on the importance of price. I commented his article on my latest podcast. Click here to listen to this episode.