Can you believe that the price of gold is now $1600 an ounce? I have been following the gold market for 12 years now and I still remember when goldAs someone who has personally watched the price of gold climb from its bear market low of  $252 an ounce in July of 1999,the rise seems almost surreal. I still remember analysts calling for gold to fall to $200 an ounce! Unbelievable!

 

Historical Price Of Gold chart - 2001 - July 18, 2011 

 

 

Historical Price Of Gold Chart - 2001 To 2011

It has been quite a journey to this point and like many other gold bullion investors and enthusiasts, you can't help but wonder right now:

Is gold in a bubble? Have we reached the ultimate top?

I'm not a fortune teller; no one knows what the ultimate top for gold will be.  But, we can use history as our guide to what a top in past super bull markets were like.

Remember real estate, the last great bull market bubble? Now think about what the peak of that boom was like. Were your friends and neighbors talking about and buying real estate? Okay, now think about gold. Do you know anyone that owns silver or gold coins? I don't know about you but the only gold that my neighbor owns is his wedding band, LOL.

Let's go back even further to the great stock bull market of the 1920's. I remember years ago reading a book about the history of the great depression. Joe Kennedy (President John F. Kennedy's father) made a huge fortune in 1929, when he went short on the stock market. Why did he go short?  Well, as legend has it, he heard a shoe shine boy giving stock tips. He knew then and there that everyone and his brother was in the market and it was time to get out.

So, I think I can safely say that when you hear the bag boy at your local grocery store telling you to buy American Gold Eagle coins, it will be safe to assume that the great gold bull market is over.

Even if $1600 isn't the ultimate top for gold, I do think that at some point, we will see a correction. The price of silver and gold are volatile, in any environment. That is a fact.  No bull market goes straight up without a correction of some sort. How big the correction will be, I can't say. But, be prepared for a drop of some sort.

That being said, I do think that the underlying economic and monetary trends supporting the rise in gold are still in place.

  1. We've got concerns about the euro-zone debt crisis and the lack of agreement on raising the U.S. debt ceiling.
  2. We've got higher inflation and an accommodating monetary policy.
  3. We've got a budget deficit that is downright scary, to say the least.

I don't see these trends reversing anytime soon, do you?

Should you buy in the event there is a correction?

In the past, it has paid off very nicely to buy on pullbacks. But, you have to be prepared for the volatility if you're going to invest in this market.  Don't invest any money in precious metals that you can't afford to lose.

Good luck!
Christina Goldman

Recommended Gold Products:

1 oz. 2011 Gold American Eagles
1 oz. 2011 Gold Canadian Maple Leafs
1 oz. Pamp Suisse Gold Bars
1 oz. Gold Krugerrand Coins