In trading today Gold broke $1,600 per ounce for the first time in history to $1,604.70, coming off a low of $1,478.30 on July 1st. Gold prices have rallied more than $120, which is an 8.5% gain in just a few weeks. What is fueling this rally? Gold is being acquired as a safe haven as the European debt crisis heats up and concern in the US over the debt ceiling still lingers.
The bull market is still strong for gold and technical analysis is adding momentum. Gold is headed for the longest rally since 1980. Though this really is somewhat insignificant, what is important is that gold has been running for ten years and is showing no signs of stopping, rising from $252/oz to where it stands today at $1,604.70/oz
This gold bull market will end at some point. The question lies in how. The way I see it is it will end in one of three ways: governments around the world get serious about reform and austerity measures which creates a sell off, gold rallies into a bubble formation caused by panic investment buying by the general public (like Nasdaq 2000 or real estate 2004-2005), or if we returned to some kind of gold standard again in which case gold would not be needed on a personal level because the currency is fully convertible into gold.
Ultimately the goal is to get in while the price is still rising. People ask us when should I buy gold? The answer is as long as you are long-term and acquiring physical gold anytime is the right time. Summer is typically a good time to buy as the price typically falls back a bit, however this summer it is rallying uncharacteristically. If you try to time the markets it becomes a trade and what we are doing when acquiring physical gold is protecting our assets, which is not a trade. As long as gold is bought and held through the trend cycle gains will be made all along the way.
The goal is to buy before any of the three options above occur. Therefore the sooner you get into the market the better. Gold has closed higher than the previous year ten years in a row and is on track to do so again this year.
Another question that we get asked frequently is: did I miss the boat? If you compare the last bull market in gold bullion from 1970 to 1980 to today you will notice that gold rose over 2,400% (1970-1980) and it has only risen 536% so far in today’s bull market. Now we don’t have a crystal ball but historically speaking it looks as though we have a lot of upside potential in gold.