Who would be an investor in these markets? Portfolio screens across the globe in virtually every asset class are a grim, grim scarlet. Oh, for some green. Yes, the general markets rallied yesterday, but that was just noise. We all know they’re toast.

I know many who are considering throwing in the towel. What’s an investor to do? Property? Toast. Commodities? In a nasty correction. Equities? See above. Cash, then? Maybe – but which currency? The dollar? Yeah, right. The pound? See the dollar. The Euro? Overvalued. The Yen? No interest. The Canadian dollar? Vulnerable to a commodities correction. Which leaves, er, Swiss Francs? Not bad. I own some.

And, of course, there’s always gold. Yes, I know it’s down almost $100 in ten days; yes, I know I’m always harping on about it, but hear me out. In my opinion, we’re near a low.

Why you should buy gold now

Here is a monthly chart for gold since 2001, when this bull market began, with arrows pointing to August. You can see that every year except 2006 the markets rallied from August to the end of the year.

(If you cannot see this image, click here)

I see no reason why this pattern shouldn’t recur this year, with a low set some time over the next fortnight or so, followed by a nice bullish move into year end.

The problem is how much further has it to fall?

Well, I have been buying more physical this week. I don’t care if it falls another five percent. I’m confident it will rise a lot more in the future. I’d rather own physical gold than just about any other asset and the fundamentals – whether it’s declining supply, increasing demand, the time of year, insolvent banks, global financial crises, money supply growth, inflation, you name it – get stronger and stronger.

That said, if you want to get really technical and bottom fish, I would suggest $850 is a likely target area. That was the old 1980 high. It was a strong point of resistance late last year, but, ever since, it’s proved a support level. What’s more, the 52-week moving average (green line) has been a very reliable bottom caller in the past and that currently lies at $855.

But it may be that we saw the low yesterday and we’ll get a straight bounce off the trend line.

The ferocity of this down move has me very nervous. But then I remind myself: don’t panic-sell gold in August. The fundamentals for gold haven’t changed.

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Source: Why August Is a Great Month to Buy Gold