question-time-for-goldbugs-to-admit-defeat

With the state of economy and the condition of governments worldwide, there’s good reason to be investing in gold within your portfolio. But are you wondering if it’s time to throw in the towel on gold? Join the crowd. The following article provides all the facts.

 

By Jeff Clark,
Senior Precious Metals Analyst, Casey Research

After a 12-year run, it looks like gold’s wave has truly crested, and many bears are arguing that it’s all downhill from here. A quick glance at a long-term gold price chart can certainly seem to confirm this impression.

01_GoldsLongRiseHasTurnedDownwards

Gold’s price has fallen by more than a third since its 2011 high. The downturn exceeds the 2008 waterfall selloff. Many technical analysts are saying that the “damage” on the charts is too great for gold to recover. The rout is so bad, even hardened goldbugs have grown quiet lately.

Is it time for gold investors to admit defeat?

Well, if it were true that “damage” on a chart such as we’ve seen signals the end of a bull market, perhaps it might be. But is it so? Or is this just a correction?

One of the greatest bull markets in modern times was the Nasdaq in the 1990s. The Nasdaq composite rose a whopping 1,150% over the span of a decade. But did you know it had a major correction in the middle of that run? The same is true of oil’s big surge in the mid-2000s. Consider this chart of the big corrections oil and the Nasdaq experienced:

02_BigSelloffsSeenDuringRecentBullMarkets

After seeing prices crash in both the Nasdaq and oil, most investors assumed those bull markets were over—but they weren’t. Here’s the subsequent rise in each after prices bottomed:

02_LargeSelloffsLedtoMassiveGains

The Nasdaq and oil did recover from their large corrections—despite all the technical “damage” many pointed to as proof that those bull markets were over. Investors who sold their positions during the downdrafts missed out on some fantastic profits.

Given that all the reasons gold rose from 2001 to 2011 are still in force, I am convinced gold’s current correction is the setup for a second big surge—and, ultimately, a true gold mania of historic proportions. (Continued below . . .)

 

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Just because gold doesn’t seem to be reacting to Fed money-printing at the moment doesn’t mean it won’t. Sooner or later, reality trumps fantasy. Reason says that you can’t quintuple your balance sheet in five years and expect no repercussions. The Fed keeps hinting it will taper its money printing, but it still has not. We’ve had QE1, QE2, Operation Twist, and now QE3… none of them has worked, and the new Fed chair wants to print even more money.

It’s pure fantasy to believe there will be no consequences to these actions—and the reality is that whatever else happens, gold will react positively.

Should gold investors admit defeat? I say it’s reckless central bankers who should declare defeat.

A gold recovery is inevitable. Prepare accordingly. Try BIG GOLD risk-free for 3 months to access our GLD put strategy, frequent bullion discounts, and the producers that will respond the strongest once the recovery takes hold. 100% satisfaction, or your money back—click here to get started.

About Jeff Clark: The son of an award winning gold panner, Jeff helps work his family’s placer claims in California, Nevada, and Arizona. Gold is never far from his mind or his heart.

While working as a psychological counselor, Jeff invested in the IPO of Snapple, made a bundle, and discovered how very profitable speculating can be. Investing in precious metals and mining became the most natural thing in the world for him.

Making money in the precious metals industry — both for himself and his subscribers — is what drives Jeff. He is constantly researching companies to recommend, analyzing the big trends in metals, and looking for safe and profitable ways to capitalize on the gold and silver bull market. He puts his money where his mouth is, and is completely committed to making BIG GOLD the best precious metals advisory for the prudent investor.

 
 
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