Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Stairway to Heaven

Commodities / Gold and Silver 2012 Mar 14, 2012 - 07:56 PM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleIt's now 6 months since gold hit its current all-time high. How long 'til the next...?

Thanks to hindsight, the bull market in gold which followed Richard Nixon unpegging the US Dollar, and therefore the rest of the world, from its last pretence of a Gold Standard sounds as inevitable today as Jimmy Page's solo in Stairway to Heaven, also a 1971 classic.


But the gold price's rise from $35 per ounce to $850 in less than a decade hardly ran that smooth at the time.

Gold's Stairway to Heaven

Hitting a new record high of $70 per ounce within a year of floating free from the Dollar, gold took 6 months to reach and breach that high again. The gold price then took a further six months to break the next July's top at $127...then almost 7 months to break spring 1974's high at $179.50...and then more than three years to top that winter's peak of $195.25 per ounce.

Knowing not to sell but hang tight wasn't easy. Not least because US investors had only just got in at the top. Nixon's successor as US president, Gerald Ford made buying gold legal for the first time in three decades on the last day of 1974. But planning ahead, international bullion dealers had already pushed the price to that peak of $195 per ounce just 1 day earlier. So come the middle of 1976, America's earliest buyers had lost 45% before costs.

Who could have said for sure that they would recover not only that loss, but make a further 355% gain on top, when gold finally peaked at the start of 1980 - the same year Zeppelin broke up? And who could have guessed that second peak would then prove gold's ultimate climax - way up there, as high as heaven itself - for nearly three decades, longer even than a live Jimmy Page solo?

Gold's Hairway to Steven

Fast forward to spring 2012, and it's now six months since gold hit what remains, for now, its latest all-time peak - a London Gold Fix on 5 Sept. 2011 of $1895 per ounce.

Just how long might gold owners wait to see it get there again? To date, the 21st century bull market has enjoyed seven breathers longer than this one so far. Ignore the first (it took the gold price very nearly back to 1999's two-decade low beneath $253), and the average wait in these extended pauses has been nearly 11 months.

Chart

As you can see, higher prices are harder work to recover. The one before this - which began the day Bear Stearns imploded - took the gold price one-third lower for US investors. Its next peak (if not its final crescendo) came 180% higher from there.

Think of it more as Hairway to Steven than Stairway to Heaven. Because like the Butthole Surfers, investors either love gold or hate it, and the vast majority don't get it at all. It makes one hell of a racket, terrifying and surprising those who dare to go near it, pounding onwards and upwards, right until the moment it falters and stops.

"Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability," says Dylan Grice, strategist at Société Générale in his new Popular Delusions report for clients.

"Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK...Until [then], the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold."

In the meantime, investors and savers cannot know that they are buying an uptrend instead of the top. Gold took very nearly 28 years to recover the big top of Jan. 1980 - way up there at $850 per ounce. That topped the 25-year recovery in US stocks after 1929's Great Crash. We won't know if Japan sets a new record pause with its stocks and real estate until November 2017. But the 30-year bull market in US Treasury bonds is sure to leave a heavenly high-water mark when interest rates turn upwards from today's all-time historic lows.

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in