Thursday, July 11, 2013

Thoughts about Gold price correction

When will gold hit bottom? I have no idea. A 50% correction, which is normal in a long-term bull market, will put gold at about $950. So far it has corrected 37%, the biggest correction in its 12-year bull run. As Jim Rogers have been saying since 2011, what is abnormal is not the correction, but the decade-long winning streak. A correction must come for gold to make a nice solid bottom, from which it can take off again.

I have taken this opportunity to increase my silver holdings by a further 50% so far. I am getting more very soon. I can't get enough of it. Prices may fall further, but then I'll just buy more.

Given that such price movements are normal in markets, Gold-bugs and anti-gold-bugs alike still try to justify it with various reasons. The gold-bugs say there is price manipulation in the market. The anti-gold-bugs say "Aha! I told you gold is a bubble!"

Manipulation may be successful in the short run, but I imagine it is impossible in the long run. One will simply lose too much money trying to manipulate the market. When I ask conspiracy theorists to explain to me step-by-step how manipulation works, they are at a loss of words. Gold is exchanged in more than 10 independent exchanges worldwide. In the long run, prices are set by supply and demand of gold, not some wall street guys shuffling paper around. If the government has been manipulating the gold market, they have failed horribly. Gold has risen more than 4 fold in the past 12 years.

As for those crying that gold is a bubble, it is weird to hear this coming from them, considering that they missed the ride from $250 to the current price of $1250 (it hit $1900 in 2011). It's also amusing that they are not detecting the mother of all bubbles - government bonds, especially the US long-term government bonds.

In the mean time, continue accumulating!

No comments:

Post a Comment

 
Web Statistics