Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Alarm!

Commodities / Gold & Silver 2009 Oct 30, 2009 - 01:56 AM GMT

By: Adam_Brochert


Best Financial Markets Analysis ArticleThe paperbugs need to fear the future. It is coming. It is inevitable. It is not gloom and doom, it is not guns and food in a wilderness cabin, it is not the end of the world, and it is not the inflation or deflation debate. It is simply a Gold bubble.

Of course, when I say that it is a Gold bubble, what I mean is that the Gold bubble has just begun. This occurred when Gold broke out above $1000 strongly, to create $1000/oz as a floor for Gold rather than a ceiling. This clears the way for much higher Gold prices. I don't mean to misrepresent myself as a prognosticator, as we are all just bozos on the speculation bus, but I think the path is now clear for Gold to go much higher. I believe that $2000/oz. is a conservative target for Gold, but $3000-$10,000/oz. wouldn't shock me. In any case, I use the Dow to Gold ratio to guide my thoughts and decisions. I believe the Dow to Gold ratio will reach 2 at a minimum and less than 1 this cycle wouldn't be surprising.

While I place no faith in the government to do anything correctly or in "the people's" best interest (I am not a paperbug that believes in magic government powers, after all), I do recognize the bureaucratic power to destroy a currency. Will they succeed or will we have a Prechterite crash that causes the U.S. Dollar to rise to heights unimagined? These are interesting academic exercises to me, but I am no longer interested in the academic.

What I know is this. The US Dollar provides unacceptable risk and doesn't compensate its holders to take that risk. Period. Cash is king, but one had better hold the correct form of cash! The US and UK are on a crash course with reality and I doubt, if history serves as a reliable guide, that the outcome will be pretty.

Stocks, real estate and corporate bonds are toast, and everyone knows it. In fact, those who invest in such assets are relying on governments to bail out the system many times more. When's the last time that relying on governments to do the right thing made for a wise investment decision over the longer term?

That leaves us with commodities. But the ironic thing is that commodities don't usually do well when the economy is moribund. Sure, they can do well if inflation is rampant and out-of-control, but this is a wish and not a guarantee.

I have cast my lot with Gold. It is an international currency and reflects a cash holding that cannot be debased by government decree or apparatchik stupidity. Is Gold money? Some say it cannot be spent at a Wal-Mart and thus is not money and yet go on to recommend government bonds or Swiss Francs in the same article! When's the last time you used Treasury Bills, foreign currency or stocks to pay for groceries in the United States? If Gold wasn't money, governments wouldn't hoard it and list it on their balance sheet as money.

Anyhoo, Gold is on the threshold of a MAJOR move higher in my opinion. This is not inflation or deflation or anti-Dollar, this is a secular bull market set to enter its mania phase. Gold has been on the rise steadily for ten years. Did I mention that it has trounced stocks, cash, and T-Bonds over the last decade? That's right, over a 10 year period, a piece of "worthless" metal has outperformed stocks. How can Bloomberg and other Wall Street mouthpieces take themselves seriously since this is the case?

Really think about the implications of this fact: Gold has outperformed stocks for 10 years (actually more, but let's stick with an indisputable fact to keep randy paperbugs from trying to argue on a technicality). A piece of metal is a better investment than a bunch of really smart guys with ties and computers. What does this mean?

Don't underestimate Gold here. Don't underestimate the cyclical and secular bull market that continues to astound the critics while remaining a hated and much-maligned asset class. You want love? Go watch CNBC. You want acceptance? Buy what Cramer tells you to buy. You want to make money? Buy an asset class that has gone up only 4 fold in the last decade, is at all time highs, and is hated by mainstream media sources. Every time Gold drops $10/oz., some clown from "traderbank" or some other unknown or even a known outfit has a sound reason why the Gold bull market is over.

From your experience, whatever it may be, does this sound like the way bull markets end? Does anyone remember the boom? Does anyone remember the oil and real estate bubbles? By the way, watching those who are still touting the oil and real estate bubbles is actually a good exercise. Listen to their wonderful arguments that are based on "sound" fundamental principles and then spook the reality: every asset class has its time under the sun. It is simply Gold's turn.

Gold is not a religion to me, though it is my passion to spread the word of where to put your money. Oil goes up 14 fold over ten years and then collapses. Gold only goes up 4 fold in 10 years, but now it is supposed to collapse without the final mania phase? Yeah, right. And I should buy stocks right now at the top for the long haul, right?

Here's a current 6.5 year daily chart to show you where I think we are in this current intermediate-term Gold bull market thrust, which is not over in my opinion. This ain't mainstream, people. This is calling for a bubble in a freakin' piece of metal. And believe me, investing in Gold is the optimistic scenario. I in no way would invest in Gold if I thought society was about to collapse. In the 1970s, Gold went up 24 fold and society didn't collapse. Investing to me is all about accepting that various asset classes fall in and out of favor. This is what the Dow to Gold ratio is all about. I am not advocating trying to eat Gold, oil, stocks or paper currency instead of food! Without further rambling, here's the Gold chart with my thoughts:

I think we hit $1200-$1600 before spring is over. Could I be wrong? Of course! Could the Gold bull market be over? No. Not possible. An asset class bull market does not end with an absence of public participation and mainstream media scoffing. We are just getting warmed up. The herd still wants to buy Apple, not Gold. Have you purchased any physical Gold yet?

Visit Adam Brochert’s blog:

Adam Brochert

BIO: Markets and cycles are my new hobby. I've seen the writing on the wall for the U.S. and the global economy and I am seeking financial salvation for myself (and anyone else who cares to listen) while Rome burns around us.

© 2009 Copyright Adam Brochert - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules