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There have been numerous gut-wrenching corrections on gold's journey in price from a low of US$256 back in early 2001 through its recent run past US$1,100, but gold has continued to rise inexorably. Each time it pulls back, the media give reasons why it was just a bubble and it's deflating. They're wrong.
Look at the strength in gold just this year.
Gold is simply the inverse of the dollar, which is worth less and less every year. The dollar has its short-term reversals, but that's all they are, just as gold's pullbacks are short-term corrections.
What is the top for gold? I don't know. But I know it isn't there yet. How do I know? Because the vast majority of the public still doesn't take the metal's rise seriously. What happened to tech stocks will happen to gold. What happened to oil will happen to gold. What happened to housing will happen to gold. It will have a parabolic move. And since it's a much more liquid asset than housing, the move will be more like oil in 2007–08 when it jumped from US$80 to almost US$150 a barrel, or tech stocks in 1999–2000, when the Nasdaq 100 jumped 88%.
When gold is near a top, it will be all over the mainstream media, not just the financial media. People will say that buying gold is a no-brainer, and we'll probably hear numbers like US$8,000 an ounce or more.
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There is no top to gold. Look what gold was worth vs Argentina's currency in 2001. Or what gold is worth to an individual in Zimbabwe.
ReplyDeleteGold and silver held even in small amounts will make the poor man rich. This is comparatively speaking of course; to the lemmings that will be holding stocks, cash and the like.
People something extremely important happened today. The relationship between the stock market and the US $$ has changed. Usually when the stock market rally, the US $$ falls in value which led to some people thinking that inflation was behind this. But today the market rally led to a rise in the value of the US $$. I don’t think we are going to see any collapse.
ReplyDeleteChina must have threaten Obama big time on the value of the US Dollar. Looking at the Asian maket today and the Dollar is still appreciating against all major currencies and Gold price retreating. I bet the FED has started to intervene on the currency market and buying Dollar......
ReplyDeleteyou all seem to forget that mining companies are gearing up as we speak to begin producing much more gold. same ole result every time an inexhaustible resource rises in price. eventually production rises more than the market can use, then the bust follows soon after. there is more gold in the earth than humans can comprehend.
ReplyDeleteYeah 7:15 is right. Gold production is soaring and will continue to soar as mining companies locate and mine more and more deposits.
ReplyDeleteOr not.
Or not is more likely. The 'easy' gold has been mined; everything going forward will be more difficult to extract resulting in substantially higher prices. And that without taking the economy and financial system into account. Forget the average Joe investor; he can't afford gold.
ReplyDeleteGold is only short term investment as there is no returns on gold besides capital gains and with rising production, the current gold price will not be sustainable for long and will eventually crash.
ReplyDelete9:18 they have been saying that since 2001. Like the ,com bubble, oil, and the rest of the "bubbles", this spike has not materialized yet. When the spike occurs, then its a bubble, until then you're WAY OFF.
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