Two week ago, the 2 major indexes of Gold stocks – the HUI and the XAU – surpassed their 2008 highs. It reminds me of when the Dow broke decisively through 1000 into new all time high territory back in 1983. It indicated then (although not recognized by most) that a new major Bull Market had begun. Today, the Gold markets rise above $1,250 indicated to me at least, that a new leg in the Bull Market in the Gold and Silver and their mining stocks has in reality just started, rather than blowing off. They didn’t believe the market then and most don’t believe Gold, GDXJ, HUI and XAU now. “Back then if the Dow was able to more than triple, going from 1,000 to 3,600 in a little over 3 years which proved to be only the beginning of its march to 14,000: now as back then, I think we can see a more than tripling in the GDXJ, HUI and XAU mining indexes over the next three years. This will just be the start for eventual much higher highs into 2017, exactly as I had originally forecast back in 2005.
Even though there have been lively discussions lately about when the Bull Market in Gold will end, I find the idea of Gold in a “bull market” completely misleading as if Gold was a consumable commodity like oil or coffee or copper. Once again, Gold has become real money: The standard by which the “value of all other things” are measured. The apparent increase in the price of Gold as expressed in Fiat currencies is as much a reflection of the respective currency’s vanishing purchasing power, due to inflation, in its true sense, as is its increased preference as a store of wealth. To hold Gold over currency is in recognition of currency’s lost function as a store of wealth. As long as there is an ever increasing propensity for the US and the world’s central bankers to keep printing fiat money and using it to monetize their country’s Debt, there is NO chance that Gold is even close to blowing off. While it is possible that Gold (Silver) can get ahead of itself and will therefore correct, the correction will only be a temporary set back that will offer a perfect opportunity for us to increase our positions.
Because Gold is not consumed and its rate of disappearance is miniscule, it should NOT be considered a commodity according to the definition of that word. Commodities, like steel, copper, grain, potash, sugar, rubber, etc. are the raw materials which are consumed in the process of manufacturing or just living. While Gold has been hoarded for more than 5,000 years, every ounce ever found is still being hoarded in one form or another, but mostly as Central Bank Reserves and as individual’s store of wealth and/or jewelry.
Since Nixon took the US Dollar off of the Gold standard in 1971, the US Dollar is now worth only $0.12 in 1971 dollars.
IS GOLD TOPPING OUT?
Should we be so lucky as to see Gold manipulated down to $1,200 or even e $1100 as it may be, don’t panic. And don’t make the mistake of thinking that the “Bull Market” in Gold is over. It will be just another GIFT HORSE to be taken advantage of, just as we have done in the past. Gold will resume its steady rise in price as expressed in currencies as long as currencies continue to be indiscriminately mass produced “out of thin air,” which is the only TRUE definition of Inflation. The more inherently-worthless Fiat dollars that are created “out of thin air” and used primarily to monetize the nations’ debts, the more Fiat money it will take to buy any asset with real intrinsic value, especially Gold and Silver.
The biggest profits always accrue to those with the courage to stand alone. Try calculating company profits at $6,250 Gold and $250 Silver. You all know my track record, so before you consider following somebody’s advice, check out their track records first.
Up until now, whenever the stock markets are weak, the reaction has been that fear flares and capital flees into the relative safety of cash (US dollars) and US Treasuries. (What a joke, I’d laugh but it’s not funny). The dollar has become a slave to the SPX’s fortunes, not the other way around as most would assume. Slowly but surely, more and more people are waking up to the realities. If I told you once, I have told a 1,000 times, Gold is in a market unto itself and there is no lasting long term correlation to any other markets. We are in a Once in a Lifetime 16 to 20 year Bull Market for Gold and Silver – DON”T BLOW IT.
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categories: Financial Planning,Investing,Gold,Mining,Finances,Investments,Silver,Stocks