munKNEE.com Your Key to Making Money
Gold has plunged more than 20% and is off nearly 30% from its 52-week high. A 
buying opportunity? Hardly. I’m…looking for another down leg in the range of $1,000 to $900 an ounce. That’s another 20% to 25% loss. [Here’s why.]
So writes Adam Fischbaum (www.streetauthority.com) in edited excerpts from his original article* entitled Think It’s Time To Get Back Into Gold? Think Again.
[The following article is presented by Lorimer Wilson, editor of www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here) 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. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Fischbaum goes on to say in further edited (and in some instances paraphrased) excerpts:
The End Of The World Has Been Postponed
When it comes to investing, fear is often a primary driver. Most individual gold investors are driven by fear. [While] most institutional gold investors use it purely as exposure to an asset class the man on the street buying shares of GLD or South African Krugerrands is frightened of:
- runaway inflation,
- currency devaluation,
- government overreach and
- societal collapse.
It’s always good to think about survival, but it’s a terrible investing theme. Domestically, things are improving.
- The unemployment rate is shrinking slowly. It currently sits at 7.6%, down from 10% at the deepest part of the crisis recession. It isn’t great…but it’s a considerable improvement. One positive consequence: The slower that businesses are to hire new workers, the slower the money will flow. Inflation will remain tame.
- The dollar is stronger than the panicky masses think. The U.S. Dollar Index (DXY), which measures the strength of the dollar versus other benchmark currencies, is up nearly 14% since 2011, despite the Federal Reserve’s QE.
Goldbugs believe the shiny yellow metal serves as a proxy currency to replace weak fiat money. If market forces dictate the rise of gold prices as the dollar falls, then the inverse — gold prices falling as the dollar rises — is inevitable.
The Fed has also hinted that it may begin slowing down or “tapering” its bond purchases. This indicates an eventual end to QE and the debased currency. If you think gold prices have a downward bias now, wait till tapering really begins!…
Think about the classic goldbug argument: invest in gold as an inflation hedge. I just can’t see the logic in this outside of protecting a portion of your wealth. The simple explanation of inflation is that it takes more money to buy less….
[While] any major events in the Persian Gulf, Europe or the Korean Peninsula could send gold soaring on the fear trade, global economies could erupt into chaos, and QE could go on forever, is always a possibility, realistically, the chances are probably slim. U.S. GDP growth, while not stellar, has improved dramatically, surging from negative 8.9% during the 2009 recession to a positive 1.8% currently.Conclusion
As the U.S. economy continues to improve steadily, the Federal Reserve prepares to dial back its QE policy, and investors continue to rotate into stocks, the price of gold is poised to fall further. Look for another down leg in the range of $1,000 to $900 an ounce. That’s another 20% to 25% loss.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
*http://www.streetauthority.com/energy-commodities/think-its-time-get-back-gold-think-again-476152 (Copyright 2001 – 2013. StreetAuthority, LLC All Rights Reserved.)
Related Articles:
1. Gold: Likely to Fall to $950 – $1100; Unlikely to Rise Above $2,000 – Here’s Why
An analysis of the ratio between the market capitalization of gold (MCG) and the gross world product (GWP) over the past 63 years suggests that the current price for gold has further to fall and that it would not be wise to begin buying gold until prices have fallen below at least $1100 or $950. Read More »
2. These 4 Indicators Say ” the immediate outlook doesn’t look good for gold”
Below are the four most important factors that influence the price of gold indicators….If you understand and correctly interpret these four indicators, I guarantee you’ll make more intelligent buy/sell decisions. More importantly, you’ll make more profitable ones as well. Read More »
If you want to make rabbit stew, first, you have to catch the rabbit so hopefully, first, we’ll see some concrete signs that a bottom is in before the regurgitation of “Gold is going to $10,000!” starts showing up in a host of new articles pandering for attention. The best way is to decide for yourself…so let us go to the most reliable source, the market, and see what the prices of gold and silver have to say about what everyone else has been saying about them. People have been known to exaggerate, even lie in their “opinions,” but the market never does either. Read More »
An earlier article on gold & silver went viral with almost 30,000 reads on munKNEE.com alone and continues to be read by hundreds of goldbugs daily. Below is an updated chart and analysis suggesting that gold & silver have further to drop before they go parabolic. Take a look and share it with friends. Read More »
5. Gold to Plummet to $1,200 – $1,250 & Ultimately Drop to $1,000 – $1,100
So claims Greg Guenthner (http://dailyreckoning.com). He stated that once gold breached $1,350 it would plummet to $1,200 – $1.250. So far, so good, but will his $1,000 – $1,100 price for gold come true?
6. Nouriel Roubini: Gold to Be Gutted! Here’s Why
Roubini expects gold will fall below $1,000/oz, taking prices down to approximately 30% from current levels; a point not seen since 2007. Here’s why. Read More »
7. Gold Bugs: Look Out Below! Gold Could Drop to $1,000
Scott Grannis thinks gold could fall to $1000, or even less, as it realigns with other commodity prices.
8. Given the Selloff, Is Now a Good Time to Buy Gold? Leave a comment
My answer is no. In fact, depending on their overall allocation, I believe investors should consider trimming their holdings. Here are 4 reasons why that is the case. Read More »
