An open letter to investors who are bullish on gold
TDC Note – Obviously this is posted for target practice. My guess is, this person doesn’t understand money nor history. He certainly doesn’t display much knowledge of finances. I just have one question. If gold is so hated, so barbarous and “not money” then why in the world are the Chinese and India’s scooping it up with both hands? Why has Russia increased their acquisitions over the past year? Let’s look at one other aspect that Mr. Howard SFB’s is overlooking. China, India and Russia own our debt, not vice versa. It might be prudent to have “a pet rock” that no one else can lay claim to when the ship runs ashore. by Howard Gold, Market Watch To Anyone Who’s Still Bullish on Gold: For some years, I have watched with puzzlement as you held on to gold out of deep affection and conviction. Gold clearly peaked above $1,900 an ounce back in 2011. Since then, its trend has been down, with a few rallies you must have found reassuring. But on Monday, gold tumbled to around $1,100 an ounce, its lowest price in five years. When a stock, market, commodity or currency continues to hit lower lows and lower highs, what do you call it? A bear market. When that happens year after year, for four years, what do you call that? A secular, or long-term, bear market. The last secular bear market for gold lasted 20 years. A secular bear is what gold is in now. The charts tell the story. So do the money flows: Professional and retail investors are fleeing the SPDR Gold Trust GLD, +0.17% like rats from a sinking ship. Its gold holdings have dropped to just above 22 million ounces, the lowest since 2008.
Many of you gold bulls are driven by your political beliefs, not a realistic assessment of what’s going on in today’s markets and economy.
And yet your intense belief in gold may be preventing this market from hitting bottom and eventually recovering ahead of the next long-term bull. But none of that will happen until you surrender. As MarketWatch columnist David Weidner pointed out, gold has certain definable up and down periods. The last secular bull market in gold lasted from August 1971, when President Nixon cut the last ties between gold and the dollar, and January 1980, when it peaked at $850 an ounce. Gold skyrocketed more than 20-fold in the raucous 1970s bull before plunging down to Earth. It didn’t see the nominal $850 level again for more than a quarter century, and has still not scaled that peak in inflation-adjusted terms. But starting in 2001, with gold above $250 an ounce, the yellow metal rallied more than 500% to its 2011 all-time price high. In the 1970s, a loose, inept Federal Reserve, led by Nixon flunky Arthur Burns, allowed the inflation that began during the Vietnam War to get out of control, exacerbated by two oil-price shocks (the oil embargo of 1973 and the 1979 Iranian revolution). But Fed Chairman Paul Volcker killed the gold bull market by raising short-term rates sharply. In the 2000s, Alan Greenspan’s loose monetary policy inflated a credit and housing bubble just as China’s rise set off a worldwide commodity boom. The subsequent crash and financial crisis triggered a debt explosion as governments tried to save their financial systems and spend their way out of depression. Continue Reading If you can stand it>>>