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
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Approaching Mania Stage

Commodities / Gold & Silver Jan 16, 2008 - 08:43 AM GMT

By: David_Vaughn


Gold appears to be holding up well. Over 900 an ounce now but most investors are still asleep. What is a “mania?”

“ An abnormally elevated mood state characterized by such symptoms as inappropriate elation, increased irritability, severe insomnia, grandiose notions, increased speed and/or volume of speech, disconnected and racing thoughts, increased sexual desire…” “…inappropriate social behavior.” “Mania is the Greek word for madness.”

Well, maybe a shorter definition of mania is when everyone gets on the bandwagon sending share prices to the stars. And we are getting closer to this event. My take any way.

“Gleam in gold investors' eyes hints at mania” “Surging price tops $900…” “The price of gold is skyrocketing thanks to investors' desire for a haven amid recession fears and global instability, plus a weak dollar and rising prices of other commodities such as oil.”

With gold continuing to rise to obscene heights it is just a matter of time before the symptoms of gold fever or gold mania kick in. People are watching the price of gold rise and their blood continues to boil higher though their senses seek calm. Gold fever and mania eventually get into an investors blood and blows a bull market into an exploding water heater. In every gold bull market the escalating price of gold is often ignored until an emotional trigger is reached and tripped. We are quickly coming closer to the tripping point.

“Gold futures briefly rose above $900 an ounce -- a record …” “Gold set a trading a record of $897.30 on Thursday.” "It's a reflection of market sentiment: Gold is a hedge against uncertainty, and right now it's the best bet," said Carlos Sanchez, a precious-metals analyst at CPM Group in New York .”

Here is an interesting riddle.

Gold climbs new peaks and even now is scaling the 900 level yet many of the gold stocks are quietly hibernating. Because gold stocks have overall failed to keep pace with the rising gold price many investors have lost patience and left the arena. And of course this brings us to the million dollar question. Which gold stocks will rise and which gold stocks will just sit there.

“Gold prices continued their stratospheric rise early Monday as the US dollar sank to 75.50 on the index amid reports that Citigroup might now have to write off as much as $24 billion in subprime-related losses. Coming within days of the scary estimates of similar write-downs at Merrill, the news propelled bullion to new highs near $915.00…” Kitco .com

But make no mistake that there will always be a selective number that continue to do well and will reach new record highs. But we are talking about really the chosen ones deemed by the master newsletter writers as the cream of the crop and the ones to hold on to for future price appreciation. What the situation calls for now is an assessment and an analysis of this gold bull market so that we may better understand where the gold stocks are going…eventually. The physical gold price is doing very well. It is only common sense that eventually the gold mining shares will play catch up to the physical gold price.

When will the gold stocks begin moving to catch up with the gold price? I believe in 2008 we will see the equilibrium established again. All the fundamentals are still there. And very strong fundamentals to boot. Is the wait trying your patience? Often there is a disconnect between the shares and the actual price of gold itself. I suppose if it was easy everyone would be rich.

“Gold, Breaking $900…”“New York gold futures hit record highs in a market expecting further Federal Reserve rate cuts that may mean more dollar weakness. It was the metal's first settlement above $900 and was underpinned by inflation fears and global tensions, analysts said.” The Wall Street Journal

Bull markets must always travel a wall of worry as there is a general disbelief and disconnect to what is really happening. The facts are ignored as the psychology seeks to readjust. Plus, there continues to exist this worry that we are at a peak and therefore gold is soon going to crash. Well, it hasn't crashed yet. What we have witnessed so far is normal market volatility. According to Jim Rogers we are in a very lengthy commodities bull market.

Are the presidential elections becoming more exciting to you as Election Day moves closer? You want to hear what I think would be two perfect tickets for both the Democrat and the Republican candidates? Obama running as the democratic presidential nominee and Hillary his vice president. For the Republicans let's see John McCain as the presidential contender and Fred Thompson as his vice presidential nominee. Now, we are ready for a battle that will wake this country up.

How far does gold have yet to climb? I am reminded by many readers that remind me the 1980 inflation adjusted figure for gold is over 2400 US dollars. So, if we look at the gold price with inflation figured in the price still must more than double to reach parity of days long ago.

“Dave, How much is a 1980 dollar worth today? Gold is nowhere near breaking all records and has a long way to even reach 1980 levels.” W.

Say, what?

“David, It's only a third of what it was in 1980 dollars….to achieve the same worth today as then, gold will have to go to around $2400 an ounce….much ado about nothing.” Thomas L., NYC

You are right Thomas. Much ado about nothing. And yes we are going to see 2.400 an ounce yet.

"None of the other investment options look that great and gold does." “Still, when adjusted for inflation, gold remains well below its all-time high. An ounce of gold at $875 in 1980 would be worth $2,115 to $2,200 today.” ‘The momentum with gold is almost like mania. We keep wondering how high it will go," said Jon Nadler, an analyst with Kitco Bullion Dealers in Montreal . Investors looking to get in on the gold rush can expect volatility for the rest of the year, said Nadler, whose firm forecasts a trading range of $750 to $950 an ounce.”

And where do the experts see the price of gold down the road and in the foreseeable future?

"For at least the next 50 to 75 years, prices for many natural resources are headed up. If you don't already have a substantial share of your equity portfolio in energy resources, precious metals & base metals, do some switching into them now." - Kenneth Rogoff, Professor of Econ. - Harvard

It's not too late to invest in gold related equities to take advantage of their wealth preserving attributes. We are living in the last days of cheap resources and commodities. Gold Letter, Inc. reviews undervalued gold stocks poised to rise in this time of increasing demand.

Click here to order Gold Letter

Send me an email.

By David Vaughn
Gold Letter, Inc.

© Copyright 2008, Gold Letter Inc.

“The Worldwatch Institute, an organization that focuses on environmental, social and economic trends, says the current rate of global demand for resources is unsustainable.”  

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2008, Gold Letter Inc.

David Vaughn Archive

© 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