During the oil price boom, forecasters were predicting levels of $250 a barrel. It topped at $140 after piercing the psychologically important $100, and then fell heavily to bounce at $40. Gold pierced the $1000 level on its second attempt, and then has flown over $1300. The shape of the rise since 2001 is the dreaded parabola. The more the price rises, the more it rises. It’s the shape of a herd driven price rise.
Once the herd turns, the charge south can be devastating. At least with oil, people in the real world had to keep buying the stuff. Gold is simply being hoarded. Jewelry sales worldwide are collapsing, and scrap is being traded at a significant discount to the market price. The moment the market will break is when the bulls get nervous. That moment could come at the same time as a stock market reversal. We will see. The bulls I know will be checking inhere to comment. But here anyway is your parabola. It’s a bubble, and we know what happens to them.
Nadler on Kitco
the fact that equities and gold are presently rising basically in tandem is also a reflection of the fact that hedge funds and similar specs have infiltrated the market and are stripping away one of gold’s historically reliable attributes; that of being a shelter from falling stocks.
The same money that is driving up shares is driving up gold. As one turns down, so will the other. I imagine shares cannot keep up record rises ad infinitum, as they have in September, the best since 1939, which is not a great year to seek a parallel from.
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