Watching the metals markets (gold, silver) for the last few weeks has almost been like an exhilarating roller coaster ride.
After hovering in the $1500 range for a good bit of the summer, the yellow metal began an almost parabolic rise to first $1600, then $1700, amazingly to $1800 and almost unbelievably to just above $1900 this past Monday.
We looked it at this with pessimism of sorts too – any meteoric rise like we witnessed is bound to crash.
Think of the housing bubble that popped a few years ago. After a while, you begin thinking ‘are houses really worth this much more’?
Of course, you can’t draw too many correlations between the gold and housing markets – even though many gold detractors try and do so by saying gold is in a bubble. Housing of course is a much larger market. People (…including you and me) will certainly place a higher priority on finding a place to live than buying a 1-oz gold coin.
(If push comes to shove, I’m willing to bet a junk silver coin that most of us reading this blog will gladly sell an ounce of gold, even at a loss, to get a roof over our head!)
Even the biggest gold bugs claim gold was due for this sort of drop – many are saying a 10% correction is not out of the question
This Tuesday though has seen a reversal from green arrows to red, with the decline continuing into today. Currently (1:34 PM Wednesday 8/24), gold is back down in the $1760 area, off an amazing $102 per ounce today…we’ll see how the rest of today shakes out.
It’s hard to say where gold’s bottom will be considering this latest increase was so much. As we’ve observed here, gold has seen this ‘two-step forward, one-step back’ pattern for essentially the last decade.
Regardless of where it bottoms, times like these represent great buying opportunities. With the fundamentals leading to gold’s rise still in play, only detractors think gold is way overvalued and due for a major correction (…say 50% or so).
We of course don’t think that’s the case. And considering the last months of the year generally see increased demand, this current correction will bottom out and we’ll once again see gold go higher.
Yes, $2000 would be a significant mark to reach but many of our long-time investors and analysts think this mark will eventually be hit…it’s hard to tell exactly when though.
Will we see $2000 gold before the end of the year? Is it possible we’ll see sustained values above $2000 an ounce?
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