Is Our Gold Bull Market About to Charge?James Cordelaine
There’s rarely been a shortage of people writing about gold. But now that the shiny metal has had its best-performing quarter in almost thirty years, coverage of its market movements has accelerated, particularly in the financial press. Most of the comment has been either from gold bugs or bashers in the form of assured predictions. Depending on which camp you belong to, this bull market is either due to continue on a magnificent journey to higher prices, or is simply a set-up in the form of a short-term rally, only to be followed by a crash.
Among the recent commentary from gold bugs is an April 8 article by Adam Hamilton in Seeking Alpha, a crowdsourced publication specializing in financial markets. What sets Hamilton’s essay apart from others on the same site, as well as those in more well-known publications, is the wealth of evidence he brings to his argument.
On New Year’s Eve of 2015, two weeks after the Fed gave the nation its first rate raise in almost ten years, and gold slid to just above its “secular low” price of one thousand and sixty dollars per ounce, Hamilton published another essay entitled “Fueling Gold’s 2016 Upleg.” Essentially, this earlier piece makes a strong argument for a higher gold price in 2016. In his current article, the writer proudly reminds us of the accuracy of his prediction, inasmuch as the financial press at large had been publishing grim news about gold for a while.
But Hamilton is no apocalyptic drum-beater for hard assets over all; his bullish argument for gold is grounded in historical proof. Here’s what he has to say about Fed rate increases and the yellow metal’s market moves:
“The Fed has executed 11 cycles of 3 or more consecutive rate hikes since 1971, and gold’s average gain throughout all of them was 26.9%. In the 6 where it rallied, the more gradual ones launching with gold near major lows, it soared 61.0% on average….So late last year’s popular notion among futures speculators that gold was going to get slaughtered in a rate-hike cycle was utterly ridiculous in light of all historical precedent.”
He reminds us too that American investors are defying Wall Street and their “anti-gold training,” and flocking to gold as a safe haven, as well as for portfolio diversification.
So with the facts on your side you can feel more confident when you invest in physical gold; you’re making a very wise move. Today’s closing spot price of $1257 represents an uncommon opportunity. If Hamilton’s correct in his prediction, and the gold bull market and stock bear market have only just begun, you stand to make considerable profits by investing now – thereby offsetting potential stock market losses.
Perhaps more important, and yes there are higher priorities than short-term profits, is long-term protection. If you can see retirement on the horizon, a bear market in stocks is a serious peril. Yes, the market is cyclical, but if your planned retirement date coincides with a downswing, funds you’re going to need just won’t be there. What’s more, a bear market has additional ramifications for unemployment figures. You may plan to retire in five years, but the market may have other ideas. Many retirees find themselves sidelined earlier than they ever expected due to job loss or even health issues. It’s vital that you look hard at not just the best-case scenario for your retirement, but, crucially, the worst – and plan accordingly.