When the mice solve the maze gold bullion will get back on track.
March 25, 2011 - What will it take to get the price of gold bullion back to its long-term moving average? Personally, I don’t care. The longer gold stays undervalued the more opportunity I have to invest before the fundamentals inevitably force the market to catch up.
Europe’s debt crisis, which remains a major market driver, is getting worse, not better. Now Portugal is going to need a bailout. And the economy is not recovering - it’s headed the opposite way.
While the Fed proudly announces that manufacturing output has risen for eight months straight, orders for manufacturing machinery have suffered another decline. That’s not a matter of whether the glass is half-full or half-empty. The glass was nearly drained and is now only gradually being refilled. And manufacturers are far from being optimistic enough to expand their capacity.
Estimates for the annual growth in GDP are also steadily sinking. Current estimates from some of the most respected economists lies between 2% and 2.5%. At best that indicates growth is stagnant. More likely we are heading back into recession.
Throughout the last recession and Bernanke’s ill-conceived attempts at recovery, gold bullion has stood strong as safe haven. Yet gold is still a vastly underheld asset. In part that is because retirement funds are only gradually overcoming a long-held but unsupported stigma against gold. And in part it is due to investor uncertainty.
Individual investors have been flooded with so much conflicting news and advice that they just don’t know which way to turn. Like mice in a maze they rush from one dead end to another. They smell the cheese but can never find it.
One day soon, however, they are bound to take that one right turn. They will realize not only that gold is the safest asset they can own, they will realize the immense opportunity present in today’s significantly undervalued gold bullion market.
