Thestudent,
Good analysis. I would argue though that the CB's would not start to sell all their gold into a rising market. If you assume the dollar is in a secular bear market for the forseeable future and with limited options to put their money elsewhere (the yuan not yet convertible, the EURO still in its infancy, etc), CB's would be more likely to hold their gold in 2003 vs in previous years given Americas trillion dollar a year budget and trade deficits.
In terms of the gold buying public, I think it will take a completely new generation of investors to lift gold into the $450+ category and take it into a sustained bubble. It took 25 years for stock investors to lift the DOW past its 1929 high. It will take a new generation of investors to give life to the Nikkei. It took a new generation to lift the DOW past its late 1960's high of 1,000. In these massive bubbles, it usually took at least 20-25 years.
We are at that time frame right now for gold. Most investors today were not around for the gold bubble in 1980.
If the DOW plunges through 7500 to a new multi year low and Bond yields continue to surge (in which housing gets hurt), I think that could be the recipe for gold to go over $450 and into a sustained bubble. People start to buy gold simply because everyone else is buying it.
Also, during major bear markets, mutual funds have historically lost huge amounts of assets under managment. In Japan, they have lost over 90% of assets held during the bubble. With enough destruction in the stock market and with bonds getting crushed (due to foreign selling), gold could go ballastic.
There's a higher chance of gold going over $750 than the DOW going over 15,000 in the next 5-10 years.
Good analysis. I would argue though that the CB's would not start to sell all their gold into a rising market. If you assume the dollar is in a secular bear market for the forseeable future and with limited options to put their money elsewhere (the yuan not yet convertible, the EURO still in its infancy, etc), CB's would be more likely to hold their gold in 2003 vs in previous years given Americas trillion dollar a year budget and trade deficits.
In terms of the gold buying public, I think it will take a completely new generation of investors to lift gold into the $450+ category and take it into a sustained bubble. It took 25 years for stock investors to lift the DOW past its 1929 high. It will take a new generation of investors to give life to the Nikkei. It took a new generation to lift the DOW past its late 1960's high of 1,000. In these massive bubbles, it usually took at least 20-25 years.
We are at that time frame right now for gold. Most investors today were not around for the gold bubble in 1980.
If the DOW plunges through 7500 to a new multi year low and Bond yields continue to surge (in which housing gets hurt), I think that could be the recipe for gold to go over $450 and into a sustained bubble. People start to buy gold simply because everyone else is buying it.
Also, during major bear markets, mutual funds have historically lost huge amounts of assets under managment. In Japan, they have lost over 90% of assets held during the bubble. With enough destruction in the stock market and with bonds getting crushed (due to foreign selling), gold could go ballastic.
There's a higher chance of gold going over $750 than the DOW going over 15,000 in the next 5-10 years.
I was looking to talk about the gold market and how it has been rising so much. I have been studying it for a few years now and it seems to be the best place to put money in at the moment. If anyone is into the bullish gold market as well please feel free to contact me with questions, perspectives,knowledge and good chit chat as well. I also have work to share if anyone is interested.