Chosen Thought

Archive for the ‘Gold Fundamentals’ Category

Real interest rates haven’t been negative for over 20 years, when the last Great Gold Bull peaked. Negative real interest rate environments are the most potent fuel known for igniting out-of-control and spectacular gold bull markets.

So gold should form the core of a portfolio in times of depression and recession. During the great gold bull market of the 1970s, the average monthly gold price increased from under $35 to over $675 an ounce… representing a 1,833% gain.

If today’s gold bull market makes similar moves forward, gold prices could skyrocket well over $5,000 per ounce. With gold riding high peaks lately, it’s hard to imagine that any investor could still remain in the dark about the potential of the yellow metal. But despite the record-breaking prices, the greater investing public just hasn’t jumped on board the gold train. When you think of how much gold has risen since 2001—it’s nearly quadrupled—it still doesn’t seem to have excited an awful lot of people. There doesn’t seem to be much public participation yet. There’s no sense of a mania, at this juncture. One day, there probably will be, and then it will be really big. So some people who suggest that this is a bubble already, I think are probably mistaken.

So the danger lies in the government printing press. And true wisdom is to hold gold in the face of the devalued dollar. And as long as the world is restless with our increasing money supply, our trade deficits, our unfunded liabilities, and the complete inability of Congress to stop the government spending… the price of gold will continue to rise. Clearly, these problems won’t end any time soon.

While gold has shown a healthy appreciation, the stock market still remained in the doldrums. Despite the run-up in bullion prices and precious metal shares, the bull market in gold has just begun. The analysis is mainly derived from the bullish fundamentals of the yellow metal as well as the bearish fundamentals of the U.S. Dollar. In addition to favorable fundamentals, there are sociological signs that the bull market in gold has just started.

Gold has been in a secular bear market and is now in a secular bull market. Market experts use the term secular to indicate a long time period. Not an entire century, but perhaps to represent events that occur “once in a lifetime” because they are so long. The price of gold over the last decade displays one major cyclical bear market from early 1996 to early 2000 and a major cyclical bull market from early 2001 to the present.