We are Confident the Bull Market in Gold is Not Over
Gold rose $3 yesterday...climbing back towards $900. Many gold investors are worried that the end of the Fed's rate cuts also means the end of gold's bull market - at least for the near term.
We don't think so.
Rate cuts, more loans, rebate checks, money supply increases - it all adds up to higher rates of inflation. And there's no Paul Volcker on the horizon to stop it.
Here's the way our friends at Doug Casey's 'Big Gold' report see it:
"So what happened? Is the bull market over, or is it intact?
"We are confident the bull market in gold is not over. There is simply too much pressure for higher inflation and a weaker dollar for gold not to rise. A dreadful day (or week or month, or even a season) for gold doesn't drain out the bad stuff that's been simmering in the economic cauldron. The Federal Reserve hasn't stopped printing money (in fact, it's picked up the pace); the U.S. government hasn't balanced its budget (in fact, the 'stimulus package' is making the deficit worse); and the dollar's foreign exchange value hasn't fallen nearly enough to cure the U.S. economy's enormous trade deficit. In short, we don't share the sentiment that all is better in the U.S. economic and financial systems.
"It's our opinion that gold's downturn and the corresponding easing of worries about the financial system are temporary. How long 'temporary' will continue is unknown, but events always trump psychology at some point. First we will see investors return to gold - and then we'll see newcomers fleeing toward it."
Bill Bonner
The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
- 40 Years of Inflation, 80 Years of Dow/Gold
- Why Choose Gold When Real Interest Rates Sink?
- U.S. Dollar Bulls Rallying Behind Fed Statement
- Stocks and Gold Are Going In Opposite Directions
- Australian Credit Card Debt Grew by 9% in February
About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.