The wildest predictions for gold market prices may not be so crazy after all. Posted by James Randolph on August 22, 2011
The wildest predictions for gold market prices may not be so crazy after all.
August 22, 2011 – It looks like just more of the same this morning, the early gains on the stock market have been all but erased and the gold market price is taking a poke at $1900.
It’s been over a month now that gold and the Dow have been virtual mirror images, long enough to safely state the obvious: gold is staging a comeback as the one true safe haven. It isn’t so much that investors have had a sudden change of heart, it’s just that faith in fiat money has fallen so low that they are left no other choice.
Clearly investors are making a realistic assessment of the economy and are finding precious little to be encouraged about. Yet behind the scenes some big money is buying, and one has to wonder why. Maybe they are betting that the Fed isn’t through screwing things up and Bernanke will find a way to pump just enough more air into the equities bubble for them to turn a quick and tidy profit.
Nothing radical is happening in today’s markets. Gold is only in a bit of a hurry to get back to where it should be and equities are responding to very real uncertainties – and not just a little panic. Both situations can be expected to create considerable volatility over the coming months, but the course seems clear.
Until such time that the government butts out and lets equities find their own way it will remain nearly impossible to make rhyme or reason of the market. At best it will be a crapshoot for the short term, and even holding for the long run holds no guarantees. On the other hand, gold, as always, is relatively free to seek its proper price.
Still, price movements of 100 points or so can be expected for a while, and there is always the possibility that a selloff by giant funds could create an even deeper drop, but the bottom is not about to fall out. Pressure is steadily building for retirement fund managers to preserve the value of their assets, and they too will soon turn to gold. Just a tiny percentage increase in gold holdings among global retirement funds will easily elevate investment demand to the dominant market driver, supporting strong growth and subdued volatility.
The bottom line is that regardless of the price – and I have to bite my tongue to say this – it is still time to buy. Even the wildest predictions for gold market prices aren’t looking so crazy any more.
Senior Staff Writer – Certified Gold Exchange