The gold price
Gold Bull or Dollar Bear...? - 16 November 2009
Is this a gold bull market or a Dollar bear market...?
SO IS THIS MOVE higher in Gold Prices the result of a Dollar bear market or a gold bull market, asks Steve Sjuggerud in his Daily Wealth.
Yes, you can have one without the other. For example, the US-Dollar Gold Price soared 50% from early 2002 to early 2005 – but that was a Dollar bear market, not a gold bull market.
Let me explain.
Gold went from $280 to $420 an ounce in those three years. But in terms of Euros, gold was exactly flat, at around €320 per ounce. So that was a bear market in Dollars, and NOT a bull market in gold.
Whereas my simple definition of a bull market in gold is when gold is rising in terms of all four of the most widely traded currencies – Dollars, Euros, Yen and Sterling.
Then you're in a gold bull market. And today, we're in a gold bull market.
In each of the last three months (and in six of the last 11 months), gold has risen month-over-month versus all four major currencies: the Dollar, the Euro, the Yen, and the British Pound. Indeed, the numbers are astounding.
Since 1971, gold has risen against all four currencies month-over-month 31% of the time. If you simply hold gold during the month after that happens, the compound annual gain in gold is an astonishing 34%.
For the other 69% of the time (when gold didn't rise against all four currencies in the previous month), gold lost money over the next month. Extraordinary!
Using this simple gold indicator, gold delivers a 34% compound annual rate for US investors – and that's been after it's moved up against the four major currencies.
It's no surprise gold is soaring right now. But to answer the question at the beginning – Is it a bull market in gold? Or a bear market in the Dollar? The truth is, unlike 2002-2005, it's both. It's a bull market in gold AND a bear market in the Dollar. The US Dollar has dropped nearly 15% since March against an index of the Euro, Pound and Yen.
There's no hurry to sell your gold yet.
Looking to Buy Gold today? Make it simple, secure and cost-effective at BullionVault...
SO IS THIS MOVE higher in Gold Prices the result of a Dollar bear market or a gold bull market, asks Steve Sjuggerud in his Daily Wealth.
Yes, you can have one without the other. For example, the US-Dollar Gold Price soared 50% from early 2002 to early 2005 – but that was a Dollar bear market, not a gold bull market.
Let me explain.
Gold went from $280 to $420 an ounce in those three years. But in terms of Euros, gold was exactly flat, at around €320 per ounce. So that was a bear market in Dollars, and NOT a bull market in gold.
Whereas my simple definition of a bull market in gold is when gold is rising in terms of all four of the most widely traded currencies – Dollars, Euros, Yen and Sterling.
Then you're in a gold bull market. And today, we're in a gold bull market.
In each of the last three months (and in six of the last 11 months), gold has risen month-over-month versus all four major currencies: the Dollar, the Euro, the Yen, and the British Pound. Indeed, the numbers are astounding.
Since 1971, gold has risen against all four currencies month-over-month 31% of the time. If you simply hold gold during the month after that happens, the compound annual gain in gold is an astonishing 34%.
For the other 69% of the time (when gold didn't rise against all four currencies in the previous month), gold lost money over the next month. Extraordinary!
Using this simple gold indicator, gold delivers a 34% compound annual rate for US investors – and that's been after it's moved up against the four major currencies.
It's no surprise gold is soaring right now. But to answer the question at the beginning – Is it a bull market in gold? Or a bear market in the Dollar? The truth is, unlike 2002-2005, it's both. It's a bull market in gold AND a bear market in the Dollar. The US Dollar has dropped nearly 15% since March against an index of the Euro, Pound and Yen.
There's no hurry to sell your gold yet.
Looking to Buy Gold today? Make it simple, secure and cost-effective at BullionVault...
Steve Sjuggerud, 16 Nov '09
Former stock-broker, mutual-fund vice-president and hedge-fund advisor Dr. Steve Sjuggerud is the founder and editor of True Wealth. Launched in 2001 and now one of America's best-followed newsletters for private investors, True Wealth also provides free analysis and ideas in the Daily Wealth email service.
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