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The Gold Bull Market is Not Dead...
Many analysts today claim that Gold is dead as an investment due to its having fallen from a record high of $1900 per ounce to roughly $1200 per ounce today (a 36% drop).
However, this price movement, while dramatic, is quite inline with how commodities trade. Gold has already posted one drop of 28% (in 2008) during its bull market, before more than doubling in price. This latest drop is not much larger.
Moreover, a 36% drop in prices is nothing in comparison to what happened during that last great bull market in Gold back in the 1970s. At that time, Gold staged a collapse of nearly 50%. But after this collapse, it began its next leg up, exploding 750% higher from August ’76 to January 1980.
With that in mind, I believe the next leg up in Gold could very well be the BIG one. Indeed, based on the US Federal Reserve’s money printing alone Gold should be at $1800 per ounce today.
Since the Crash hit in 2008, the price of Gold has been very closely correlated to the Fed’s balance sheet expansion. Put another way, the more money the Fed printed, the higher the price of Gold went.
Gold did become overextended relative to the Fed’s balance sheet in 2011 when it entered a bubble with Silver. However, with the Fed now printing some $85 billion per month, the precious metal is now significantly undervalued relative to the Fed’s balance sheet.
Indeed, for Gold to even realign based on the Fed’s actions, it would need to be north of $1,800. That’s a full 30% higher than where it trades today (see below).
Make no mistake, gold is not dead. Not by any means. The day is coming when its price will soar again.
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Best Regards
Graham Summers
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You wanna see that price drop below 400 bucks an ounce? "lets see how leveraged this bullshit really is" appears to be the Fed's view. So no..QE doesn't support the price of gold...nor does taper.
To me a lot depends on the 10yr rate which is now at 3%......anything above that makes it very difficult for the US to pay its humungous debt and, I suspect, will force the Fed to step in with more QE or some other tool from their tool box. So if rates go up I expect to see gold to follow as the expectation of inflation and more QE/ZIRP are both bullish for gold......interestingly, gold is up tonight (daytime in Asia) - we will see if it is hammered down as usual when the markets open in Europe.
Thanks for your sharing, there is really sth in it. The gold will never die. Once the government stop conducting the market, the gold will back and will beat the paper money again and again.
"Many analysts today claim that these fucking stupid-ass posts from FeeNicks Crapital are dead as Dick Clark on New Year's Eve due to the fucking gross incompetance of it's idiotic author."
By the way, and for what it's worth....
Gold is headed to $1,000, and once it busts that nut, it's on to the $700 Thunderdome Arena
Once that get's hashed out, it could be up up and away
But first "more work "on the downside
It's there in the chart...learn how to fucking read it before posting anymore of this drivil
and its 'drivel'....learn how to speal.
Maybe the "silver" plan will require silver payment? Ditto for gold and platinum. Diamonds for deductible? The bobbleheads that wrote the ACA saw the end of fiat coming?
Agreed... gold will soar in price, but not in inherent value. It's an incredibly stable commodity in terms of its supply and it's already worth what it's worth in real value. It will simply reach its equilibrium in trading power against the counterfeit paper currencies. The forces holding its "price" back cannot do so forever. The dam will break very soon.
Actually, look up 'nanogold' and 'gold catalysts' and you'll see in the coming years gold will indeed go up in inherent value - a thing not measured in fiat currencies - as the utility of gold all around the world will suddenly leap-frog.
Quite impressive.
Gold does more than just trade as money. Gold actually has intrinsic value independent of the desire to trade it.
Thanks for the bullish sentiment for gold; now I know it will go down further and allow people to accummulate from lower levels. I am waiting for the day you develop a bullish stock market sentiment then we can sell with abandon. Thanks zero hedge for a providing a great contrarian indicator, not perfect but as close we are going to get. Kepp telling us how you really feel :-)
Yeah, looking at the chart, there's still room for further depreciation. Gold miners are already pretty much beaten, don't know how much worse things can go.