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Saturday, November 17th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Gold: End of a Trend or a Buying Opportunity?

Even with the rally of the last few days, gold prices still have had a negative performance year-to-date despite two elements that should give sustained prices:

  1. The decline of the US Dollar versus the Euro and
  2. Political tensions in Egypt.

For these reasons many investors and analysts indicated that Gold’s upward trend that began in 2001 may have ended. The Wall Street Journal’ article “Is gold’s golden era over” was the pillar of the negative views on the precious metal. Indeed, the article said,

Take inflation. From 1968—when investors started to price in the possibility of the U.S. dropping the gold standard—to 2001, the price of gold rose 5.6% a year, while the Consumer Price Index gained 5.1% annually. That hasn’t been the case recently: Since 2001 gold has surged 18.8% annually, while the CPI has risen just 2.3%. To restore their historical relationship, inflation would have to rise by 8.3% a year for the next 20 years to justify current prices.


  1. Governments in the developed world, not just the U.S., have a long-term spending problem. Will they address their fiscal deficit spending on social welfare by making serious cuts or will they try to reflate their economies, devalue their currencies to stimulate exports or raise taxes to an extent they choke economic activity? Whichever way, it should be a positive for gold. Bottom line, it is prudent to have some exposure to gold in a diversified portfolio.
  2. As I have said in the past, the other side is the love trade, gold jewelry demand in emerging economies is rising and remains the biggest component of the demand equation. India’s gold imports were up roughly 46 percent in 2010 and China’s nearly 500 percent. Overall global jewelry demand was up 10 percent in 2010, according to the World Gold Council.

The original article is published at http://www.c2ads.net/full-text-rss/makefulltextfeed.php?url=http://seekingalpha.com/sector/gold-precious.xml&format=rss&submit=Create+Feed


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