Gold's Decline is Over September 17, 2008
Oakville, ON, Canada Today's action confirms the end of the short term decline in the price of Gold.
Gold peaked just over $1000 per ounce in mid March: the bottom occurred a few days ago, just under $740 per ounce.
What happened in those three months that makes us confident that gold’s sell off is over?
It’s all about market psychology.
Try to remember what you thought about gold back in March. The big US brokerage firm, Smith Barney was in rough shape. US and Canadian bank stocks were in a tail spin. The American FED had teamed up with the Central Banks of the worlds biggest economies to save the worlds banking system. Drama. Excitement. Gold at $1000 and ounce! How high would it go in these times of uncertainty?
Now try to remember how you felt about gold last week. You probably didn’t even remember to check the quotes on your gold stocks. The US dollar was rising and oil was falling. Gold? Why bother?
The price decline had accomplished the goal of all price declines: it had turned investors from wildly bullish to skeptic and pessimistic. Bull markets begin in pessimism, end in optimism.
Ken Norquay, CMT.
Financial Philosopher
ken@castlemoore.com
905-847-8511
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