Few will deny that gold has reversed its downtrend dating from 2011 and is now in the early stages of a bull run.
From a low of $1064 an oz. last November it has put on $970 by today, Wednesday 24 February, two hours before markets open in the US.
Of course there has been profit taking since the start of its rise in January, that’s only to be expected, but it has shrugged of the sellers, and no doubt any shorters have taken a bath, to continue a steady ascendancy.
Now is no better time to remind you all that “the trend is your friend”.
Remember its high was nearly $1900 an oz. in 2011 as we came out of the stock market crash of 2008 and with a further bear market taking shape and the fear factor coming into play we can expect demand for gold as the safe haven for parking cash to increase dramatically. It has been a long time coming but now gold trending up can be your friend.
Here are some facts to support the bull market in gold :
- Record amounts of physical gold is being bought by investors world wide.
- Central Bank buying is nearing all time highs with China in the lead.
- Deflation can be good for gold as it heralds another financial crisis as the fear factor leads investors to the safe haven of gold and out of stocks.
- The advent of negative interest rates takes away one of the main objections that anti-gold analysts make that gold pays no interest unlike stocks, bonds etc.
- As the excess money flow increases thanks to QE so inevitably inflation will rear its very ugly head as deflation will not be here to stay. Gold has always been and will continue to be the fundamental hedge against inflation.
- Gold is not far off an inflation adjusted low going back 45 years. This scenario alone sets the scene for a strong bull run for the metal.
- Comparing the ratio between gold and stocks tells us that stocks are way overvalued and with stocks entering a correction that is long overdue, money will go out of stocks and into gold. In fact this is already happening.
To summarize : Get out of stocks and into gold . The gold trend is your friend!