Wednesday , 24 July 2024

Gold & Silver Are Nowhere Close to Bubble Territory – Here Are 5 Reason Why

This article is presented by (A site for sore eyes and inquisitive minds) and  (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Kranzler goes on to say, in part:

Reason #1: There Has Been No “Blow-off” Move Higher Yet

We have yet to see the typical “blow-off” move higher, where investors chase the price of gold higher at all costs. In fact, those who remember the last time gold behaved in “bubble” fashion, 1979-1980, also remember that there were lines of people going out [to] coin shops all over the country and around the block as buyers lined up to chase the price and supply.

Reason #2: “Cash-for-Gold” Businesses Are Still Flourishing

Furthermore, the “cash-for-gold” business is still proliferating and profiting handsomely from people taking their gold/silver jewelry and other sundry “junk” items and selling it for a pretty big discount to the spot price. If gold were exhibiting the traits of a bubble asset, the cash-for-gold business would disappear and we would be seeing ads all over the place for businesses trying to sell into frenzied demand.

Reason #3:  Investment in Gold Is Still Less Than 1%

As it stands now, globally institutions have less than 1% of their assets invested in gold:

Given that in 1980, U.S. institutions had 6% of their holdings in gold, it is arguable that the gold bull market has yet to even cycle through the typical second stage of a bull market (1. smart money, 2. institutions, 3. public/blow off bubble) and, based on conversations with numerous national coin dealers, maybe 2% of the public has started to buy physical gold and silver (obviously, they are still selling).

Reason #4: Demand for Gold Is Not Yet Universal

Probably the best the indicator that gold is not even remotely close to being considered in a “bubble” state is this chart below I sourced from King World News, from (the black box edits are mine):

(click to enlarge)

The chart [above] shows investment and jewelry demand segmented, for the most part, into eastern and western hemisphere countries. As you can see, since the gold bull market started, western hemisphere demand has declined almost every year since the 2002 peak by a stunning 60%. Concomitantly, the demand in eastern hemisphere countries has increased almost every year. If the gold market were truly in a bubble, that blue line above would be rising at least as fast as the red line and probably faster.

Reason #5: Gold/Silver Mining Stocks Are Currently Oversold Not Overbought

The gold/silver/mining stock market has corrected to the point at which it can be considered technically oversold. The mining stocks particularly represent compelling value right now:

(click to enlarge)

From a fundamental standpoint, the mining stocks, as represented by the HUI Amex Gold Bugs Index of unhedged mining stocks, are as cheap relative to the price of gold as at any time over the last three years. This is actually true going back 10 years. As you can see from the above chart, the HUI/gold ratio chart has consolidated just above a 3-yr low, after testing the 3-yr low twice. To reinforce the potential bullishness of the mining stocks, the momentum indicators represented by the RSI and MACD are moving higher from an “oversold” condition.


Because of the deteriorating fiscal condition of the U.S. and the acceleration in global Central Bank money printing, I expect gold and silver to stage a significant rally starting in early 2013….


Related Articles:

1. Bull Markets Always End With a Bang, Not a Whimper, So Gold’s Run Should Have More Legs


[Here is a summary of my]…thoughts on the 2011 gold price peak relative to the last time a long term bull market ended (back in 1980): Long-term bull markets almost always end with a bang, not a whimper, and last year’s price peak was clearly the latter. A 25% rise over a period of about two months last year [does not an] end-of-cycle, blow-off top [make]. No, I think there’s still some room to run for gold if for no other reason than that we haven’t even come close to the “mania” stage that characterizes the end of long-term market moves…[Let me explain further.] Words: 359; Charts: 1

2. Goldrunner: Gold’s Extremely Bullish Backdrop Setting Stage for Run to $2,050, Then $2,400, Then $4,500 and Ultimately $10,000-12,000!

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3. Gold Projected to Reach $4,000/ozt. Sometime Between Late 2015 & Mid 2017! Here’s My Rationale

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4. Update: 51 Analysts Now Maintain that Gold is Going to $5,500 – $6,500/ozt. in 2015!

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5. Gold Should Be At $4,666 These Days – Here’s Why

golden dollar

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6. Alf Field: Gold STILL Targeted to Reach $4,500 – Preceded By Violent Upside Action

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7.  New Analysis Suggests a Parabolic Rise in Price of Gold to $4,380/ozt.


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8. Egon von Greyerz: Gold & Silver Off to the Races – to $4,500+ & $100+ Each – Here’s Why

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10. Nick Barisheff: $10,000 Gold is Coming! Here’s Why


This is not a typical bull market. Gold is not rising in value, but instead, currencies are losing purchasing power against gold and, therefore, gold can rise as high as currencies can fall. Since currencies are falling because of increasing debt, gold can rise as high as government debt can grow. Based on official estimates, America’s debt is projected to reach $23 trillion in 2015 and, if its correlation with the price of gold remains the same, the indicated gold price would be $2,600 per ounce. However, if history is any example, it’s a safe bet that government expenditure estimates will be greatly exceeded, and [this] rising debt will cause the price of gold to rise to $10,000…over the next five years. (Let me explain further.] Words: 1767

11. Gold’s Recent Price Action Suggests Ultimate Top of $5,000/ozt.

The correlation between the gold price from 1968 until 1979 and from early 2000 until today is an amazing 89.65%! More specifically, the correlation from 1975 until April 1979 and from January 2008 until today is an astonishing 97.83% suggesting that gold will reach an ultimate top of $5,000 per troy ounce before the bubble bursts. Words: 330

12. The Future Price of Gold and the 2% Factor

It is my contention that the price of gold rallies whenever the U.S. dollar’s real short-term interest rate is below 2%, falls whenever the real short rate is above 2%, and holds steady at the equilibrium rate of 2%. Furthermore, for every one percentage point real rates differ from 2%, gold moves by eight times that amount per year. So if the real rates are at 1%, gold will move up at an 8% annualized rate. If real rates are at 0%, then gold will move up at a 16% rate (that’s been about the story for the past decade). Conversely, if the real rate jumps to 3%, then gold will drop at an 8% rate. [Let me explain.] Words: 982

13. Gold Will Reach $3,000/$4,000/$5,000 Before This Bull Market Is Over! Here are 12 Factors Why

I believe that the price of gold will… reach… $3,000, $4,000, and even $5,000 [per troy] ounce…during the course of this long-lasting bull market, a bull market that still has years of life left to it…[although] prices will remain extremely volatile – with big swings both up and down along a rising trend…The future price of gold is a function of past and prospective world economic, demographic, and political developments [and in this article] I review some of these developments and trends – so that you can come to your own “golden” conclusions. Words: 3800

14. Gold Bullion: A Lasting Gift Any Time of the Year – Here’s Why


We can all speculate about when the next leg up for gold will kick in, but the point for now is to take advantage of the weakness, like many of [the individuals, central banks and financial institutions are doing/suggesting. When the price breaks out of its trading range, are you sure you won’t wish you’d bought a little more? Here’s a sampling of this year’s “gold bugs” and what they’ve been doing about precious metals recently. Words: 1449

15. Availability Of, and Demand For, Silver vs. Gold Suggests MUCH Higher Future Prices for Silver

The current availability ratio of physical silver to gold for investment purposes is approximately 3:1. So, why is it that investors are allocating their dollars to silver at a much higher ratio? What is it that these “smart” investors understand? Let’s have a look at the numbers and see if it’s time for investors to do as a wise man once said and “follow the money.” Words: 1052; Tables: 1

One comment

  1. I’m not surprised that the red “Asia, Middle East and India” line is going upward compared to the Blue (no pun intended) line since all the Blue Countries with the possible exception of Australia are having Fiscal problems which have started to affect their citizens in a very big way! The shrinking middle class in the USA is just starting to come to grips with this reality as ever more “once middle class” folks are now joining the new poor.

    Thanks to the Gov’t. bailout of the wealthy BIGS, which has done nothing positive for the rest of the Country, even America’s future is looking grim for the 90+ % that are not Wealthy…

    A good indicator of this is the 1.7% COLA those on Social Security got for 2013 while their Medicare costs increased 6 to 9%.

    Even those once not too concerned are now getting the message that the Gov’t. is gaming the calculations to make things look far more rosy than they really are; and that realization will encourage ever more to invest in Precious Metals, if they now have anything left to invest with.