Gold - Why Isn t It Soaring
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Gold: Why Isn't It Soaring?
Introduction
Gold often stirs passionate debate. I receive countless emails, letters, and phone calls about it. My skeptical stance on gold might surprise its fervent supporters. But year after year, gold remains stagnant, not achieving the meteoric rise many predict. Why?
Common Beliefs
Gold enthusiasts hold that gold is the ultimate safeguard against inflation, international crises, and currency collapse. They argue that a global financial crisis could trigger the collapse of the US dollar, leading people to lose faith in paper money and turn to gold as their secure refuge. In this scenario, they claim, gold could skyrocket to thousands of dollars per ounce. However, I believe this view is flawed.
Current Pricing
If you're considering buying gold at around $660 an ounce, proceed cautiously. I believe this price is inflated, perhaps three to four times its actual value. While I foresee a future where gold reaches thousands per ounce, it must first drop below $200.
Technical Analysis
In my book and newsletters, I've used charts to explain my short- to medium-term bearish outlook on gold. Historically, every five-wave move is corrected in three. Gold has been in a bear market for 27 years since its $875 peak in January 1980. The $740 high in May 2006 was merely wave B, and wave C has yet to play out before a new bull market begins.
Economic Context
My book, "How to Profit from the Coming Great Depression," indicates where I see the economy heading. Historically, depressions have involved deflation, not inflation. Gold does not perform well during deflationary periods, where cash reigns supreme.
Impact of Deflation
In a deflationary environment, the value of cash increases. Even if the US dollar weakens against other currencies, it won't affect you significantly if your transactions are in dollars. Store discounts might offset any rise in import prices, increasing your dollar's purchasing power.
Conclusion
When the time is right to buy gold, I will enthusiastically make my recommendations. But for now, gold may drop below $500, possibly coinciding with a US dollar rally. Back in 2001, when gold was undervalued at around $250, I recommended buying. The price soared to nearly $750. The key is timing. There are times to buy and times to sell; at present, I believe it's time to wait.
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