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The recent panic selling in gold bullion caused those who were speculating to get out
as their losses added up…[but] retail investors and central banks seem to be rushing to buy more. [Why is that? Let me explain.] Words: 260; Charts: 1
So writes Michael Lombardi (www.profitconfidential.com) in edited excerpts from his original article* entitled American Real Disposable Income Collapses in First Quarter of 2013.
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Lombardi goes on to say in further edited excerpts:
I still believe that the fundamentals that drove gold bullion prices [up] are still in place. Central banks are still buying gold—they have not shied away from gold bullion as prices declined from their 2011 highs.
While world central banks keep buying gold, many central banks, like the Bank of Japan, are printing massive amounts of paper money. In its semi-annual report, Japan’s central bank stated that it will continue to print at a pace of about $600–$700 billion per year. (Source: Financial Times, April 26, 2013.)
Likewise, the Federal Reserve still hasn’t given any indication it plans to stop printing fiat money anytime soon. Ultimately, this phenomenon will force other countries to print more of their currencies because every country wants a lower-valued currency than the next country. Because of this, I believe central banks will buy more gold bullion to shore up their reserves.
- Which Country Will Win the Race to Debase Its Currency the Most?
- The Currency War: Which Country Will End Up With the Fastest Currency in the Race to the Bottom?
Dear reader, the bull market in gold bullion isn’t over yet! The selling we saw was just a mere pullback.
Take a look at the monthly chart below of gold bullion prices going back 10 years.
Chart courtesy of www.StockCharts.com
Since 2002, the trend in gold bullion prices has been to the upside, and from a technical analysis point of view, that trend seems to be intact.
I am as bullish as ever on gold bullion.
*http://www.profitconfidential.com/economic-analysis/american-real-disposable-income-collapses-in-first-quarter-of-2013/
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