There is hardly any usual summer pause or pullback in gold price this year. Most analysts. traders and investors, lacking the real understanding of sound economics concept (real economics and not the Keynesian economic type) cannot understand why gold price is going up, either shorting gold and losing big-time, missing the entire gold bull run or still on the sideline hoping for a pullback to jump on board. Many are thinking that gold is in a bubble The percentage of the general population participating in the current gold bull market is still at a minuscule level of about 1% to 2%.. At the previous gold bubble top in 1980 when gold was about $850 per ounce, public participation rate was over 15%. There is a long way to go before gold is in bubble territory.
Looking at the 10-years gold chart (below), it looks to me that gold price is now in its second stage of its bull trend that started in 2001. It is possible that at some point in the future gold may get a large 38.2% snap-back pullback or retracement like the ones that occurred in the silver market in May. From what price level and when that would happens only time and price action would tell. At today's current price level of just above $1,600 per ounce gold is now nearing a doubling of price from its previous price high of $850 in 1980. Normally a doubling of price is a very important technical price milestone and can bring in profit-taking activities and that doubling in price is $1,700. Will the widely anticipated profit-taking pullback occur as gold approaches $1,700, only time will tell. However, without a major pullback the short-sellers are doomed and if they are force to cover it could propel a fast move up in gold price to a dizzying level.
For now with the Euro zone and the United States in crisis that cannot be solved, gold can continue to go up and up until the current monetary system totally implode. The endgame is the inevitable global collapse of fiat currencies that could send gold price into the stratosphere, which may still be 3 to 5 years away, and could be longer if the governments in the US and Europe continue to mess around with the free market mechanism, which they would most likely would do.
For now with the Euro zone and the United States in crisis that cannot be solved, gold can continue to go up and up until the current monetary system totally implode. The endgame is the inevitable global collapse of fiat currencies that could send gold price into the stratosphere, which may still be 3 to 5 years away, and could be longer if the governments in the US and Europe continue to mess around with the free market mechanism, which they would most likely would do.
For now, regardless of what the government would do, the system as we know it is doomed to implode. It is as sure as the night would follow the day The only question we need to ask ourselves now is when and in what form the monetary breakdown would occur. The path to our current monetary system implosion would depends very much on what the major powers would do now and in the future, in their misguided attempt to solved the problem. Gold is the only real money, accepted and recognized by every society around the world, as it has been for thousands of years, regardless of what Ben Bernanke think. As such, until the new monetary system emerges to replace the current ones, smart money would continue to flow into gold in exchange for their fiat paper currencies, hence would continue to push the price of gold higher and higher.
It will end one day in a bubble level, where that would be depends entirely on what would happen. Without any more money-printing by the Federal Reserve, the current gold fair value should be around $8,000 per ounce, but it is not at that price level now simply because of the gold price manipulation which has been widely reported by GATA.
