Gold Bull Market Not at Manic Stage Yet

There have been numerous gut-wrenching corrections on gold’s journey in price from a low of US$256 back in early 2001 through its recent run past US$1,100, but gold has continued to rise inexorably. Each time it pulls back, the media give reasons why it was just a bubble and it’s deflating. They’re wrong

www.financialpost.com; By: Jack Adamo; Forbes;;

In further edited excerpts from the original article* Adamo goes on to say:

Look at the strength in gold in 2009 (+24%). Gold is simply the inverse of the dollar, which is worth less and less every year. The dollar has its short-term reversals, but that’s all they are, just as gold’s pullbacks are short-term corrections.

What is the top for gold? I don’t know but I know it isn’t there yet. How do I know? Because the vast majority of the public still doesn’t take the metal’s rise seriously. What happened to tech stocks will happen to gold. What happened to oil will happen to gold. What happened to housing will happen to gold. It will have a parabolic move.

When gold is near a top, it will be all over the mainstream media, not just the financial media. People will say that buying gold is a no-brainer, and we’ll probably hear numbers like US$8,000 an ounce or more. Miniature gold bullion will be sold in fancy department stores here, as it is now in England, or even in vending machines, as it is in Germany. We’re nowhere near the end yet.

How to Play It
Is gold heading to US$2,200? That would be in line with the 1976–80 gold bull market gains. [Here are some suggestions] on how to play it:
1. ETFS Physical Swiss Gold Shares or the more well-known
2. Street TRACKS Gold Shares (NYSE: GLD).

I prefer the Swiss shares because custody is outside of the U.S. The U.S. forbade private citizens to own gold back in 1933. It’s not likely, but in case that ever happens again, I’d rather have my gold in Switzerland.

3. Market Vectors Gold Miners ETF (GDX).

It is not the ideal way to invest in the gold miners in terms of fundamental values but does provide us with greater diversification, and I do believe that this ETF is where the money will flow when the gold miners finally go parabolic in their ascent.


Editor’s Note: The above article consists of edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered. (editor@MunKnee.com)

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