All Posts Tagged With: "bull market"

Gold prices have been all over the place lately…but Ed Bugos points out, below, that the outlook for both long and short term is bullish, but you will need to have some patience…

There are only two things gold bulls should worry about from this point forward, now that the general commodity correction is out of the way and the froth has been worked out of the market: deflation in the strict sense of the term (monetary, not asset deflation) or a suddenly brightening economic outlook, both of which, in this writer’s opinion, would require a political austerity hardly imaginable these days.

The bull market in gold started on a transition to “the middle stages” of an inflation cycle that began with Greenspan’s reign in the nineties. During that decade, the pundits argued that inflation was dead and that there was no longer any correlation between money supply growth and the price level, which was true if you forgave the method of calculation of both statistics, and ignored the technology bubble. But, the fact was simply that we were in “the early stages” of a new inflation cycle.

Let’s consider what the Federal Reserve is doing for the trend in gold prices – a trend, I am loathe to inform you, which it is not fighting. Let me sum it up: the trajectory of this bull trend shifted north when Bernanke took the helm of the Federal Reserve System, and that the policies pursued by the Bernanke Fed have confirmed the investment thesis driving the bull market in gold. As one pundit recently noted during a Bloomberg interview, “You gotta go with the inflation theme… it’s the only thing still working.”