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| Reference Material |
| Why Gold?
By Antonio Anciano October 26, 2006 This is the explanation of the suggested investment position. There are two general reasons: a) historical trend and b) financial and economic fundamentals HISTORICAL TREND The last gold secular bull market took place between 1968 and 1980 when gold trended higher from $35 per troy ounce to $850 spot basis. Secular means generational or a long period of time from the Latin word saeculum. From 1981 to 2001, gold languished in a secular bear market where the bottom was hit at around $250/oz. From 2001 to 2006, gold is now regarded as in a new secular bull market having risen from $250 to a high of $730. To summarize: 1) 1968 to 1980 -- bullish phase of secular cycle.-- 13 years 2) 1981 to 2001 -- bearish phase of secular cycle.--20 years 3) 1968 to 2001 -- complete secular cycle from trough to trough --33 years From 2001 to 2006, gold had been advancing trendwise; this is in all probability an early phase of a new secular bull market. The Opposite Trend --Wall Street Wall Street also has an approximate 30-year secular cycle which has ranged from 28 to 33 years in the last 100 years or so. That is evident in the linked chart: http://www.scidocs.org/trends.htm (Note: Just because Dow and S&P PE ratios have declined from 45 to around 16 to 20, does not mean that stocks are a good long-term buy. That would be foolish. These PE or price to earnings ratios are headed downwards, towards 5 to 7 times , around 2012 to 2016.) Look at the chart again. That is exactly what it says. The process is called "regression to the mean". Wall Street's secular cycles were about 30 years in duration: 1920 to 1949, and 1950 to 1982. The current secular cycle 1982 to 2012? has already peaked in year 2000 after an 18-year bullish phase, the greatest bull market in all history. It is now on its bearish phase heading for bottom between 2012 to 2016. The most "brilliant" observation therefore is that: gold becomes a secular bear when Wall Street becomes a secular bull and vice-versa. It's very simple isn't it? Gold could therefore be expected to attain its secular peak in the vicinity of also 2012 to 2016, which is the opposite extrapolated bottom of Wall Street. And at what price should we expect gold to peak? I have no idea. If we assume the magnitude of the 1968-1980 bull run, gold should reach about 7,000 per oz. Who knows? ECONOMIC AND FINANCIAL FUNDAMENTALS Am not going to discuss this much further. The information and opinions are scattered all over the "alternative media websites". Don't trust mainstream US financial media. It is a scam and a con job. http://www.safehaven.com/ The US dollar is gravely overvalued and the US is indebted to almost every country in the world with some financial surplus. Only the cooperation of Europe , prosperous Asia ( China , Japan , South Korea ), and the wealthy Arab countries are holding the dollar up. Also US diplomatic and military power help to keep the dollar put up a Potemkin front. Most countries with financial clout have seen their economic well-being tied to the fortunes of the dollar. If the dollar sinks, they all sink. It's a form of blackmail. This greatly unbalanced structure cannot last. Many things can disrupt it and produce that unstoppable hole in the dike. Gold would be the main beneficiary. There would be nowhere else to run. Gold is real money and real wealth. It cannot be forged or printed endlessly like dollars and all fiat currencies.***** |