That's exactly what I thought some time last year after gold broke $1K. What could possibly take it down, right? Inflation-aversion was the name of the game, oil was riding high on its way to $200/bl - well, gold is back almost all the way to that level, while EVERY single dollar-measured asset has deflated, save for the Japanese yen. I do not know if there currently are gold supply shortages vs. the year-ago levels, but if there aren't, there seems to be no fundamental reason for the pace of gold appreciation we've seen in the past two months.
Why Gold has to go down...
- Thread starter PohPoh
- Start date
That's exactly what I thought some time last year after gold broke $1K. What could possibly take it down, right? Inflation-aversion was the name of the game, oil was riding high on its way to $200/bl - well, gold is back almost all the way to that level, while EVERY single dollar-measured asset has deflated, save for the Japanese yen. I do not know if there currently are gold supply shortages vs. the year-ago levels, but if there aren't, there seems to be no fundamental reason for the pace of gold appreciation we've seen in the past two months.
I disagree. Gold's rise is signaling in advance that inflation, not deflation is going to be the big issue this year.
In fact, I would argue that gold's strength so far (and going forward) is almost entirely based on fundamentals. With governments and central banks around the world printing and spending more money than ever in the history of man, it is inevitable that gold is going to exhibit enormous strength and resilience.
I've been predicting that in this frenzied era of rolling bubbles, precious metals and gold mining shares will be next bubble. Which means that any rational indicators such as gold/oil ratio, etc. go out the window, at least for a longer period of time than many will expect before reversion actually occurs.
That said, I actually hope gold and silver do have a strong pullback first, because at this point IMO it will be the buying opportunity of a lifetime.
No, it was the one thing that held its value or went up in the face of economic stress. Nobody could print it.
Sorry, but you're wrong - inflation won't be an issue in any of the developed countries experiencing the current downturn for quite some time. When every news outlet including Bloomberg and CNBC is telling you to buy gold, you know the train has already departed and pretty soon the herd will stampede back.
The mkt looks to be disagreeing with this view recently (treat the below with all the usual caveats in mind):