Gold Posts New High
I was going to post something else today, but it's really time to get back to gold again. It passed the $1,400/oz. mark this past Monday.
Sure enough, the "B" word will start floating around the news and cyberspace. Is gold in a bubble? The short answer: no.
But isn't the price "too high"? Maybe.
In fact, under normal conditions, gold has to be considered "overbought." It's price has gotten too high too fast. So why isn't it correcting? It's started correcting a few time in the last couple of months. But it doesn't get very far down before buyers step in and start buying again, pushing the price back up.
So I'm thinking two things now:
1) Maybe gold won't really be correcting all that much, if at all.
If - as some speculate - there are sophisticated buyers out there, especially Asians, looking to buy the dips, then gold won't go down all that much before they step in. In fact, you see the phrase "Asian put" or even "Chinese put" these days.
But didn't gold experience some pretty severe corrections during its last bull market in the 1970's? Sure did. But you have to remember that back then the Chinese and the Russians - and pretty much all of Asia - was in no position to be buying gold. The Chinese and the Russians were "behind the Iron Curtain" for one thing. They didn't have functioning market economies. And most Asian countries were Third World in the full sense of that term - not like today, where they're rising in economic strength.
So it could make sense that we're not getting those big corrections we saw in the 1970's.
2) If gold does correct in any significant way, it may the last chance for latecomers to buy.
If you finally realized that gold has been in a tremendous bull market, you may be holding off on buying, figuring it's run up. So you're waiting for some kind of real significant dip so you can buy at something like a bargain price.
Hey, if we get a big correction, then you're in luck.
But what happens if we don't? What do you do then?
Well, I certainly don't want to be telling you to buy gold, or when to buy gold or anything like that in a blog, for goodness sake. That's no way to deal with the important issue of where to deploy your hard-earned money.
On the other hand, I would suggest that - if you haven't bothered to do this yet - you may want to do some homework and at least learn a thing or two about gold and figure out whether it's really something you ought to own.
But, one way or the other, don't be surprised if this new high for gold turns out to be just another step up in what may the biggest bull market of our lifetimes.
Sure enough, the "B" word will start floating around the news and cyberspace. Is gold in a bubble? The short answer: no.
But isn't the price "too high"? Maybe.
In fact, under normal conditions, gold has to be considered "overbought." It's price has gotten too high too fast. So why isn't it correcting? It's started correcting a few time in the last couple of months. But it doesn't get very far down before buyers step in and start buying again, pushing the price back up.
So I'm thinking two things now:
1) Maybe gold won't really be correcting all that much, if at all.
If - as some speculate - there are sophisticated buyers out there, especially Asians, looking to buy the dips, then gold won't go down all that much before they step in. In fact, you see the phrase "Asian put" or even "Chinese put" these days.
But didn't gold experience some pretty severe corrections during its last bull market in the 1970's? Sure did. But you have to remember that back then the Chinese and the Russians - and pretty much all of Asia - was in no position to be buying gold. The Chinese and the Russians were "behind the Iron Curtain" for one thing. They didn't have functioning market economies. And most Asian countries were Third World in the full sense of that term - not like today, where they're rising in economic strength.
So it could make sense that we're not getting those big corrections we saw in the 1970's.
2) If gold does correct in any significant way, it may the last chance for latecomers to buy.
If you finally realized that gold has been in a tremendous bull market, you may be holding off on buying, figuring it's run up. So you're waiting for some kind of real significant dip so you can buy at something like a bargain price.
Hey, if we get a big correction, then you're in luck.
But what happens if we don't? What do you do then?
Well, I certainly don't want to be telling you to buy gold, or when to buy gold or anything like that in a blog, for goodness sake. That's no way to deal with the important issue of where to deploy your hard-earned money.
On the other hand, I would suggest that - if you haven't bothered to do this yet - you may want to do some homework and at least learn a thing or two about gold and figure out whether it's really something you ought to own.
But, one way or the other, don't be surprised if this new high for gold turns out to be just another step up in what may the biggest bull market of our lifetimes.
Comments