GOLD ENTERING A VIRTUOUS CIRCLE

By Egon von Greyerz
September 7, 2010

Fundamental and technical factors for gold are now in total harmony and gold is entering a virtuous circle that will drive the price up at its fastest pace since this bull market started in 1999.
  • It is a fact that gold in US dollars (and many other currencies) has gone up 400% in eleven years or 16% per annum annualised.
  • It is a fact that the US dollar has declined 80% in value against gold since 1999.
  • It is a fact that the dollar and most other currencies have gone down 98-99% against gold since 1913 when the Federal Reserve Bank of New York was created.
  • It is also a fact that the Dow Jones (and many world stock markets) has declined over 80% against gold since 1999.
  • It is a fact that gold has made a new all time monthly closing high in dollars in August 2010.
Gold trend
We expect gold to start a substantial rise now which will continue for 5-10 months before any major correction. Gold’s technical picture is extremely strong with a continuous rising pattern of higher highs and higher lows with the steepness of the curve increasing. From much higher levels we are likely to see a correction that could last up to a year before the next rise which will last several years before we see a significant peak. Once gold has topped we do not expect the same kind of decline as after the 1980 peak since gold is likely to become part of a future reserve currency. At that point gold will be a solid but unexciting investment with very little upside potential. But that is likely to be a few years away.
For the full article please click the following link: GoldSwitzerland Market Update

September 2010
Egon von Greyerz