Wednesday, February 17, 2010

Gold Bull Market Over?

Gold Bull Market

I find it hilarious when clueless people attempt to make assertions like those I've been hearing lately that the bull market in gold is over.

The primary ignorance of some of those making these assertions is that the recent increase in gold prices has been because of gold bugs, rather than market forces, or in this case: lack of force in the market.

For some reason, people seem to resent or reject the fact that gold performs strongly when adverse economic and world conditions are uncertain, and we have been in that situation for several years, and will continue to be for many more.

Anyone who asserts gold bugs are behind the run up in gold prices understands nothing about historical responses to tough economic circumstances, the extreme printing of money, and the inevitable inflation that follows.

Add to that the sovereign risk associated with a growing number of countries, along with rising inflation, and you have a perfect economic storm for the rise in gold prices to continue, and they will.

What about the so-called gold bubble some think we're in? There's no evidence of it, on the contrary, for the most part institutional investors are the primary investors in gold, and until the general population enters into the sector, there will not be, neither can there be, a gold bubble.

Gold has a great future over the next several years, and possibly longer, depending on the rate of inflation and how long it'll take to realize we are still in the middle of a recession.

Once that happens, we'll see gold surge even higher, and those positioned to take advantage of that should enjoy strong profits from gold investing for a number of years to come.

Gold Bull Market


Life Insurance BC said...

Thank you for all the great posts from last year! I look forward to reading your blog, because they are always full of information that I can put to use. Thank you again, and God bless you in 2010.

CrisisMaven said...

A bubble in, say, shares, stocks or commodities happens when people believe it will "go up and up" (and is, as a rule, as with housing recently and "tech" stocks at the beginning of the millenium, again mainly driven by money inflation). Gold in contrast is a hedge against inflation and against looming sovereign defaults. Inflation by definition is the increase in money supply. There's no doubt that this has happened several fold in only two years. So there is inflation. Hence there is no gold bubble, as gold has not appreciated by a tenth even of what the monetary base has expanded!