The Gold Bull Market

I first starting investing in gold back in 2002 before it started making its major leg up. The reason for investing in gold was simple, yet many felt I was wrong for doing so. I choose to invest in gold because we were living in a debt based economy and gold has an excellent, long-term historical track record of preserving value. I noticed the total supply of dollars being printed each year by the Federal Reserve was growing at a dramatic rate of 13%.

I noticed housing prices growing at an alarming rate relative to median income levels and understood the end game was default. Over the past 25 years we've heard people say gold is just an "ancient relic" that holds no real value and watched the price fall to $264. The cost associated with mining has increased while the price of gold went down. This caused a lack of interest in global gold exploration and ultimately led to a decrease in supply and to the "The Gold Bull Market" we've seen.

Now we are 7 years into "The Gold Bull Market" and experts are saying we've peaked out just above $1,000/oz $US and we've reached the end of the great move. While many people would agree with this statement, I disagree based on the continued fundamental weakness in the US Dollar. We can't print our way to prosperity and every issue the US economy is facing now needs to be addressed. We've seen gold sell off, like it always does after making amazing moves up. People got exuberant and bought towards the high and now regret it. We see people shaken out so the strong hands can accumulate positions. As gold regains its moving averages and starts to gain momentum, we will likely see a retest and break of the all-time highs.

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