Friday, July 30, 2010

Mac Slavo Debunks Burst-Bubble Talk

Mac Slavo passes on a Daily Wealth conclusion that gold could fall to as low as $900 and still remain in its long-term uptrend. He also notes that some are saying gold was in another bubble that's burst. He debunks that talk by pointing out that ebbs are normal in a long-term bull market, and it won't be in a bubble until the economic picture is much darker.
We’ve noted before that Gold is often considered to be an inflation hedge. But if you look at the precious metal historically, it’s not inflation (or deflation) that drives gold up, but rather, a loss in confidence. When the private sector realizes that government is not only unable to fix our problems, but complicit in making them worse, that’s when gold really shines.

When the financial, economic, political, and monetary outlook is darkest, that’s when we’ll see the next great gold bubble come to fruition.

So, George Soros will be proven right. As other assets around the world crash - things like real estate, stocks, paper monetary systems and living standards - we’ll see capital flee to the safety of the only wealth preservation monetary asset that has survived the test of time. If you don’t believe, just ask the Greeks why gold was selling at $1700 an ounce only a few months ago.

It will be an extremely volatile ride going forward, perhaps to the point where you’ll hate your gold so much you’ll want to spit on it. But don’t sell unless you’re sure that global crisis has turned to recovery and growth.

Gold will eventually become the ultimate bubble - you can bet on it!
He also points out that gold is nowhere near its CPI-adjusted high of $2,300.

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