Home » Economy, Gold, Headline

Gold Run Over?

25 August 2011 44 Comments

The price of gold corrected 10% over the last few days. Here are the reasons why the run is not over.

1. First, a correction like we just got is actually very healthy. I would be more concerned if we didn’t have a correction and continued going up higher and higher. Corrections are needed to shake out weak hands and leverage and help to create a sustained bull run over longer than mere days and weeks.

2. The fundamentals that have supported this run are firmly in place. In fact, they are more apparent now than they were a year ago when people actually thought the economy is rebounding. Nowadays, people essentially know that the economy isn’t rebounding sufficiently and more people think it might be sliding back into recession. The government response to the weak economy will always be to debase the currency.

3. Uncertainty is still extremely high. Recently, the focus has been on Europe. There are still many more waves of uncertainty to hit Europe until the current crisis comes to a climax. We haven’t seen the end of the problems.

Interestingly, tomorrow (Friday) is Ben Bernanke’s Jackson Hole speech, and he’ll undoubtedly move the markets, since everything hinges on the magic words of our fearless Fed chief now. What a market, right?

I tend to think Bernanke won’t announce any further easing at this point and the market will fall a good bit since it has seemed to be anticipating more QE.

We’ll see. This correction might be a good time to load up your gold position.


  • Financial Uproar said:

    The CBOE just announced a hike on margin requirements for gold. That can't be good for the precious medal.

    I don't have a nickel of my portfolio in gold. It looks like quite the bubble. Of course, our differing opinions is what makes a market. It should be interesting, for sure.

  • fxgeorges said:

    i know its time to sell because i picked up some grass over the weekend and my dealer started talking about 2000$ an ounce gold. I'm not even kidding and this guy's never made an investment in his life besides the grass he sells. I was bearish before my little chat with him but he just solidified my stance.

  • Bowmanave said:

    Ap has been wrong and continues to preach but I do agree with his assesment that if the market goes down hard it will take metals with it. But thats only if the dollar holds up.. If the dollar goes down with the markets imo metals will soar and will end up as the biggest wealth transfer in history.. Its all preception. The perception that dollar is king is eroding fast. I can live with a dollar based on value issued by the gov't intrest free. The issue of fiat by private bankers has lead to the death of millions. Its time to grow up as a human race and ditch the bankers.

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  • Ron Stevens said:

    I think this is a very important time to start thinking whether to invest or to spend, gold right now is around $1600 and the dollar continues to fall flat and it will continues to lose all it's value very soon, i think this is a time to start doing some research a look for the best way to save our hard earnings.

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    Considering the situation that Europe is in now and how the U.S. economy is being affected by it, it's pretty obvious that gold and silver are the best investments anyone can make right now. While the value of the dollar is decreasing the value of gold increases. By investing in gold and silver, we are investing in actual commodities that have value and at this rate increase in its values and due to their rarity now. Unlike paper money which is only being driven by people's perceptions of its value and is also a very recent commodity. However, gold and silver were used as the standards for a longer period of time and people still trust in them and that's why they're not only the better choice in terms of investment but the safer choice.

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  • Support Hose said:

    Nope, I don't think it is over yet. I read today in the news that gold is at an all time high because of the demand in China…yikes!
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