Wikinvest Wire

Hey look! Gold still gets no respect

Thursday, May 28, 2009

Uber-blogger Joe Weisenthal over at Clusterstock points out the relatively poor performance of gold in recent weeks, offering one more contrary indicator that we're still quite early in the precious metals bull market, now in its tenth year.

Hey Look! Gold's Still Going Nowhere

You would think with all these rising bond yields, talk of a government ratings downgrade and the Fed printing money as fast as possible that gold would really start to break out. But basically it's been a snoozer.

Maybe it's because more people are thinking of gold as something you sell to raise cash in hard times, rather than something you buy with cash to prepare for harder times. Certainly all the Cash4Gold ads on TV suggest there's a lot of demand for green cash. And those other ads, where the guy keeps saying "Real Government Gold" over and over again, complete with images of nuclear terrorism, mainly makes the seller look desperate.

Yesterday, on one of those ground-moving-underneath-your-feet kind of days, the shiny metal didn't do anything.
There's the typical half-hearted caveat at the end, but the title pretty much tells you everything you need to know. Gold continues to get little respect from a lot of people and, like the career of the late Rodney Dangerfield, that's a good thing.


Anonymous said...

You can't loose with gold as it excels in extreme conditions...

Mathlete said...

People selling to pay bills is the definition of weak to strong.

Though gold buyers should be at least mentally prepared for as much as a 30%+ drop if the wheels fall off and deflation accelerates. Of course, that will shrink the asset base and the Fed will inflate further to stem the tide, multiplying future inflation.

Greater Fool's Gold said...

Looks like Sinclair is predicitng gold pops over $1k in June. Could be May the way things are going.

Greater Fool said...

Patience is a virtue with this shiny metal...

* August 1999 - Gold falls to a low at $251.70 on worries about central banks reducing reserves of gold bullion and mining companies selling gold in forward markets to protect against falling prices.

* October 1999 - Gold reaches a two-year high at $338 after agreement to limit gold sales by 15 European central banks. Market sentiment toward gold begins to turn more positive.

* February 2003 - Gold reaches a 4-1/2 year high on safe-haven buying in run-up to conflict with Iraq.

* December 2003-January 2004 - Gold breaks above $400, reaching levels last traded in 1988. Investors increasingly buy gold as risk insurance for portfolios.

* November 2005 - Spot gold breaches $500 for the first time since December 1987, when spot hit $502.97.

* April 11, 2006 - Gold prices surpass $600, the highest point since December 1980, with funds and investors pouring money into commodities on a weak dollar, firm oil prices and geopolitical worries.

* May 12, 2006 - Gold prices peak at $730 an ounce with funds and investors pouring money into commodities on a weak dollar, firm oil prices and political tensions over Iran’s nuclear ambitions.

* June 14, 2006 - Gold falls 26 percent to $543 from its 26-year peak after investors and speculators sell out of commodity positions.

* November 7, 2007 - Spot gold hits a 28-year high of $845.40 an ounce.

* January 2, 2008 - Spot gold breaks above $850.

* March 13, 2008 - Benchmark gold contract trades over $1,000 for the first time in U.S. futures market.

* March 17, 2008 - Spot gold hits an all-time high of $1,030.80 an ounce. U.S. gold futures touch record peak of $1,033.90.

* Sept 17, 2008 - Spot gold rises by nearly $90 an ounce, a record one-day gain, as investors seek safety amid turmoil on the equity markets.

* Feb 20, 2009 - U.S. gold futures rise back above $1,000 an ounce to a peak of $1,000.30 as investors turn back to gold as major economies face recession and equity markets tumble.

(Source: Reuters)

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