What if it’s not a new bull market for gold? What if gold prices are going lower – not higher? Think it can’t happen? Think again.
…On the chart below, there is a box around the years and price action of gold from January 1980 to December 1987. There is another box around the years which include gold’s price peak in August 2011 and it’s recent high of $1545.00 in August 2019 – and both periods are identical in length – 8 years. Also, both periods began with all-time highs and included low-points and recovery high points which occurred over similar time frames…
…The rally in gold’s price from its post-peak low of $1050/ozt to its recent high of $1545/ozt amounts to a 47% increase…[but, while it] is considerably less than the 67% of 30 years ago, the time frames are identical and the price action is reasonably similar. A continuation of the relatively similar pattern to that which occurred thirty years ago could take gold’s price down to below $800/ozt. Ouch!
Even if gold doesn’t sink to new lows, it could trend downwards and sideways for many years. After reaching $500/ozt in December 1987, gold dropped sharply, then traded for the next ten years between $300/ozt and $400/ozt. In today’s dollars, that would be the equivalent of gold dropping back to about $1200/ozt initially, then meandering somewhere between $1000/ozt and $1200/ozt for the next decade.
That is not a prediction. However, if you are ardently bullish about gold, you might want to revisit your expectations. Are they realistic or are you being carried away by a tide of emotional optimism?