The endless gold bear diatribe has once again fallen on deaf ears in the gold market. Posted by James Randolph on February 02, 2011
You gold bears can quit now – the gold market isn’t listening.
February 02, 2011 – The endless gold bear diatribe has once again fallen on deaf ears in the gold market. The predicted major correction proved to be only wishful thinking on the part of Wall Street traders desperate to unload there overpriced junk on any sucker they could find. They knew that the market was simply being retested, and all they could do was hope that gold would fall below a sustainable support point. Well, it didn’t and the retest was a resounding success.
Big money has already started flowing back into the market with mega-ETF SPDR Gold Shares alone pumping in nearly $200 million. That has given Wall Street cause for great concern and technical analyst Jordan Roy-Byrne tells us why in Resource Investor. Government efforts to cover up the true state of the economy has left it with no option but to continue its doomed policy of monetization, which “will be more frequent and in larger amounts.” As the government is called on to bail out foundering states, the situation will get only worse “and this will eventually lead to default or hyperinflation.”
The state of the economy is driving a well defined phenomenon called a secular bear market, one which is dominated by large bears along with a few small bulls. That happened three times in the past century and the crash of 2008 along with the subsequent rally last year are strong indications that we are about to enter a prolonged cyclical bear market. It is also very likely that bonds will also be bear at the same time, which hasn’t happened since the late 1970s.
The gold market “performs its absolute best when the other asset classes underperform.” Bear markets for stocks and bonds and a real estate market in the toilet will drive a strong upsurge in gold investments as mainstream investors are left with nowhere else to turn.
Senior Staff Writer – Certified Gold Exchange