|YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET|
by Claus Vogt
In my September 9 Money and Markets column I showed you this gold chart:
Well, that's exactly what happened last week!
Triggering Another Major Buy Signal
Take a look at the weekly chart below. It gives you a good perspective of how important this breakout to new high ground actually is. As you can see, it signals the end of a medium-term correction that began in March 2008 and the beginning of the next medium-term up trend of a secular bull market that started in 2001.
Also consider this: Four weeks ago the Hulbert Gold Newsletter Sentiment Index (HGNSI) stood at 25.2 percent. Now, four weeks later and gold nearly $100 higher, the HGNSI has actually fallen to as low as 18 percent! A rising market accompanied by a declining number of bulls is a rare development. And it's clearly bullish.
Longer Term Fundamentals
For Gold Are Very Bullish, Too
|There are many fundamental reasons to own gold. |
- As a consequence of the current financial and economic crisis, government debt is going through the roof — not just in the U.S., but all over the world.
- Worldwide central banks are printing money like there is no tomorrow.
- Gold demand is rising due to wealth creation in emerging economies where gold still plays a large role as a store of value.
- Gold demand is even rising in the West as more investors doubt the wisdom of central banks and governments.
- Gold supply is stagnating or even slightly shrinking — despite the metal's price rise since 2001. This is because it's getting ever more difficult and expensive to get gold out of the earth.
- Finally, central bankers who were eager to sell government gold at much lower prices a few years ago, are getting increasingly reluctant to keep doing so. Emerging market central banks are even buying.
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