Year One Unrated

Bang the Drum for gold, boys. Oh, how the rhythm of the gold bull continues! Only last Monday, June 28, a writer of leading investment has delivered a very high probability that gold prices top $ 3,000 an ounce and eventually will rise to $ 5,000 within 2 ½ years . All kinds of "fundamental reasons why Gold should move to these levels are constantly leaked out. All this seems perfectly rational - sense - and it may be. The problem is that logic has nothing to do with it, while a change in social mood has everything to do with it, and the social mood is not rational, it is not irrational, it is simply reckless and it is in control. The curtain in an inspection of the social mood has been changed from behind the large black candlestick that appeared in the daily list price of gold on July 1, 2010.

It is essential to understand, first, that rising prices in the long Gold since October 2008 has been an upward correction, a movement against the trend. All corrections to an end eventually. An upward correction ends with a high price, from which prices reversed the decline, and when the drop is over, prices will be at a level that is lower than they were when the correction began to rise, which in this case was in October 2008, when gold was about $ 680 per ounce.

Gold topped Monday, June 21. Exactly one week later, on June 28, the SPDR Gold Trust head, the same day as the pronouncement above appears in print. His timing was exquisite, the following Thursday, July 1, price of gold fell $ 44 an ounce, as shown by a black bar high price candlestick and all earnings of paper from May 5 have been deleted in a single day. The reasons "fundamental" for a further price increases in gold have been swept by a change in social mood that simply canceled.

Much of the race gold was probably caused by the fear of inflation oncoming. However, there is deflation, not inflation, is now harassing our economy. All the bailouts and other measures of priming was not used to boost, or boost the economy, but rather, these programs have been (until now) just to avoid a rapid deflation. However, some bootloaders end or have ended, and it is doubtful that Congress would be of a mind to add to the burden of national debt at that time by the creation of additional similar devices.

It should be borne in mind that in a deflation, prices of goods and services entering and includes in particular the price of gold and silver. They are not immune. About the only asset whose value increases during deflation is cash.

The black chandelier on July 1 was a wakeup call. It seems very likely that the gold rush is over, and that the price of gold and silver will be oriented substantially lower during the months that followed.