Stocks were higher this morning, but bulls struggle to find stable footing and the market now finds ...
Gold Will Keep Go, Go, Going
10/14/2010 1:00 pm EST
Pamela and Mary Anne Aden, editors of the Aden Forecast, think that despite gold’s recent new highs, the bull market in the yellow metal will continue for some time.
The gold price has been in a clear and clean up trending channel since the late 1960s. It has risen each year since 2001, but once gold reached a sustained record high last year, a stronger phase of the bull market began.
Gold’s exceptional rise has now reached our current target level at $1,350 [an ounce]. It’s been a super rise, up 65% since April 2009, [and] gold has soared 18% in the last ten weeks alone! (It closed Wednesday at $1,370—Editor.)
By any standard, the surge is due for a rest, but keeping focused on the big picture, you can see the gold market is more likely to eventually get swept up in a mania.
When comparing the current ten-year-old bull market to the two stellar mania bull markets of the past—the 1970s gold run and the stock bull leading up to the 2000 peak—the three look eerily similar.
Gold is still far from the mania stage. The average investor is just starting to appreciate the rise in gold. They know things aren’t right, and they are learning that gold is a safe haven. They see the dollar falling, the economy dragging with debt, and the [Federal Reserve] trying to keep it together.
Great bull markets in gold occur [once or twice] in a lifetime. The last one ended in 1980. It took 20 years before the next (and current) bull market got started.
It began when most thought gold was dead and buried. Central banks couldn’t sell their gold fast enough. The Bank of England sold theirs at the major low in 2001.
But now, with gold up 20% this year, 2010 will make ten full years of gains. This is the longest winning streak since the 1920s! Central banks [have] become net buyers this year for the first time in two decades. They’re expected to buy 15 metric tons of gold this year, a major turnaround.
If the Fed announces another quantitative easing plan, the dollar will continue to suffer and gold will rise further. Gold’s rise is in a solid intermediate trend above $1,245. Now, the July low at $1,162 is a key support level.
The mania phase [is] when the public starts to jump in. We’re not there yet, and it could still be years until gold reaches its ultimate peak.
The last time this happened was with the stock market in the 1980s-1990s. It took nearly 20 years for the frenzy to hit full speed in the late 1990s. At that time, everyone was talking about stocks. People were quitting their jobs to trade stocks and get rich.
This will happen again. It’s the delusion phase, only this time it’ll happen with gold, which has all the makings of a full-blown mega-bull market. Naturally, there will be corrections along the way.
We’ve been consistently recommending gold since 2002 and yes, there have been ups and down. But if you stay with this mega-bull rise, you’ll be very glad you did.
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