Is the gold investing cycle finished? That is the question on millions of investors’ minds today as the gold spot price took yet another fall. This time, gold fell $15 per ounce and currently sits at $1382.60 according to COMEX. It seems like only yesterday that gold was above $1900 per ounce and seemed poised to push for the often talked about though as of yet never seen $2000 mark. For the last year and a half, however, gold has been on a somewhat steady decline, but until last month the general consensus was that gold investing was still a good idea.
Then, gold dropped from $1600 to $1323 in just two trading days in mid-April. Gold prices made a decent rebound after hitting the $1323 mark, but the damage had already been done. Stock markets surged and analysts around the world started to claim that the gold bull market was over. Banks and investment firms lowered forecasts and even the inanimate dollar seemed to pep up after hearing the news. Gold derivatives investors shed gold holdings and retreated to the safety of the sidelines. After 11 years of gains, did gold run out of fuel?
As John Wayne would say, “not hardly, mister.” Physical gold buying is at its highest level in years. Gold bullion producers like Credit Suisse are having a hard time producing enough bullion bars to meet U.S. demand. The U.S. Mint has either sold out of or has been forced to ration a handful of popular gold and silver coins due to a lack of supply and unprecedented demand. Certified gold coins have barely lost any value in the last month, despite the fact that their inherent gold content is now worth over $200 per ounce less than it was in April. No, the gold investing cycle is not finished, and savvy investors who know the correlation between gold, interest rates and the dollar will tell you that we’ve only just begun.