The GOLD BULL Market
As I listen to all the waves of commentary every day on why Gold will continue to rise forever, I thought it might be nice to get a broader persective on this market. Above is a Cash Monthly Gold chart going back to 1970. It is very clear the large run up in the late 70's into 1980 and the large fall from there. Then the gradual downward grind. Of course now we have another launch that is actually larger than the first one. It certainly can be argued that it is a long term bull market because over time it has net continued to rise. It is actually rare for a commodity to have a long term trend over many decades in either direction. They generally see saw back and forth and look like an EKG.
I have stated many times how bearish I am on this market and from a bigger picture view now you can see why. The first two sharp spikes up marked with red arrows both resulted in very sharp declines. The third one is yet to be determined. We have had a very sharp downward move in the last few trading days in this market, but at this point it is still a short term move, albeit a big one. Sometimes regardless of people's rhetoric including mine, you have to step back and look at things and see if what you are being told makes any sense. I did that in real estate at the end of 2005 and determined that it was obvious everyone was lying about the future prospects, so I sold my Newport Beach Mc Mansion and rented for 2 years. I then got a pretty good deal and bought another home. Since I have horses, dogs and all sorts of things, renting is a tough prospect. I knew I was early going back in but my life was not manageable renting. I bought back in for about half of what I sold at, mission accomplished.
Why do I mention this, that could be a plan for this market. I really have no idea if we are going to 2500, 3500, 10,000 in this market. The people selling GOLD will have you believe we are at such a unique time in history that prior fundamentals do not matter, "it is different this time." Just step back and look at this chart, is this really a spot when taken into historical context, that you want to put your retirement money, right now? I will say that the next person who tells me about Fiat currency I will shoot immediately. At least get a new talking point!
What might very well happen here is they open the trap door here for a bit, shake the tree, then it presents a wonderful longer term buying point. There are so many armchair quarterbacks in this trade, I just don't think the market will accomodate them forever. I could post 100 charts in blowoff phases like this and they all end the same way, huge declines. Timing them is hard. My Silver trade the other day was right at the exact high day, very lucky even though it was based on a technical pattern that showed up for the first time on that day. However, I was looking for at the very least a significant pullback here. It appears to have begun but we are still holding support, although it broke today in Silver.