End of the Gold Bull Market?

Watching gold prices again?  They are still down.  In fact, some are calling the end of the bull market on gold.  I saw this headline when I look around the internet to see the mood of the market:

How the Gold Bull Market Ended

That’s pretty stunning, isn’t it?  It was posted on a website that claims to be watching the gold market as well as other precious metals and commodities.  (You really have to watch who you are getting your “news” from on the Internet these days, don’t you agree?)

Some of the information in the article is true; some parts are speculative and seem to be from a somewhat reactionary writer.  Let’s discuss what we know about gold prices and how they relate to the rest of the market.

We are in the midst of one of the more disconcerting times we’ve known in recent years.  Financially, it’s frightening, worrisome, depressing, and yet at some moments, exhilarating as we get a glimpse of the economy struggling to regain strength.

In the case of gold, the price shot up earlier this year to $1000 per ounce, months ahead of market predictions, which said the price would reach the $1000 mark by September or perhaps even October.  But there it was in the first 3 months of the year.

What did those within the market say?  They were aghast.  They were particularly shocked to see some retailers selling gold at prices that were below the market as they unloaded their stocks to show profits, but those profits would be eaten up by items sold below “replacement stock value.”

Ouch.  The jewelers couldn’t maintain that for very long and with the demand goosed upwards by frightened investors fleeing the stockmarket for the (relative) security of the precious metals market, the price went up until it simply couldn’t sustain itself.

Also we are seeing some improvement in consumer confidence that is buoying up the market prices and making everyone feel a little bit calmer and perhaps less interested in buying gold at over-inflated prices.

So if you sold while the market was high, we are very pleased for you.  If you bought while the market is high, we suggest you enjoy those pieces for a very long time to come.

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