Chart of the Week

First Time in 5 Years

by Michael Hayhoe

A 5 year chart of Gold showing the previous rallies that have all fizzled out before rising 20%.

For the first time since the highs in 2011, Spot Gold has entered a bull market (defined as a 20%+ rally off of the previous low). Now up over 21% from the early December lows, Gold is trading at 13-month highs and outperforming all other asset classes amid the descent into negativity by global central banks (hat tip Zero Hedge)...

This does not mean it is straight up from here but it is probably the surest confirmation the bear market has ended. A worldwide race to debase currencies is really turning the tide in favour of gold.

Just don't be like the Bank of Canada which announced this week that they had finally sold their last ounce of gold. This could turn out to be the redux of "Brown's Bottom" - the infamous moment when Gordon Brown, the UK Chancellor of the Exchequer, announced in May 1999 that the UK Government was going to sell half of their gold reserves. Gold was at the very tail end of its previous bear market and had fallen all the way to $280 from over $800. Almost immediately after the UK sold, gold went on to rally over 400% over the next 10 years all the way to $1,900, costing the UK Treasury over £5 Billion.

If you are still invested in gold, definitely stick with it. If you aren't, give serious thought to building a position over the next few months before it really gets moving.

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