Thursday, April 24, 2014

Fundamentals of Gold in the Light of the 2 Year Downtrend

Basically we had a huge run up in prices between 1999 (255 USD) to early September 2011 (1920 USD). We have been in a correction period. Now I think the correction period was partly justified because there was too much enthusiasm and speculation, leading to the peak of 2011. But I think that there have been some market manipulation, it could be. My sense is that the correction has probably come to an end, because if anything the fundamentals are much better today than they were at that time. But the price is down.

Every investor understand the principle buy low and sell high. When prices are low, nobody wants to buy. We also had very negative sentiment recently. I am not so sure about asset markets as we could one day after this colossal asset inflation of the last 20 to 30 years, also have asset deflation. But when I compare gold shares and the price of gold to the S&P 500, the S&P is up substantially since 2011 and gold is down.

- Source ETF Daily: