Investors and market analysts agreed on the bull market for gold until the sharp fall of 16% in gold price which occurred in September this year. After investors dumping suddenly gold for cash, gold resumed its ascension. However, investors became anxious after that, while analysts stay optimist. Analysts believe a downwards correction was prone to occur, considering the uninterrupted rise of gold price since 2008. But they also agree the correction is milder than expected.
This optimistic view is based on the comparison with the 2008 fall in gold price. Gold lost abruptly 30% of its price in 2008 and investors have every right to argue that it was the roughest downwards correction the market saw. But analysts point out that all other assets except for gold went through worse decreases at that time. And gold was the first to resume its growth in price afterwards. Gold ended the year 2008 with an approximate increase of 5% in value. If the bigger picture is considered, gold is constantly increasing in value since February 2001, considering that the 2008 decrease ended on an up-note. In the 3 years that have passed since 2008, gold has in fact risen by a stunning 170%.
Today's general volatility of the markets in an uncertain environment is not enough to proclaim a bubble, despite some eager voices. The last known bull market for gold before a bubble occurred was in the seventies and the level of volatility that gold market showed back then was significantly higher than that of now. Gold fell 50% in 1074, before rising to record values. But the fall spread anxiety among investors and many left the market before gold attained its record price and the steadier investors got their substantial rewards.
Analysts explain gold at this moment as being near a normal high area within a major uptrend. The moment of weakness that gold experiences now is bound to pass and explosive activity is not expected to occur but after this phase. Gold might further decline in the next two months but it would not reach worrying low levels. A decline stronger than 50%, which would justify inquietudes concerning the end of the bull market, is not expected to occur anywhere soon.
So, we are dealing with a healthy manifestation in the gold market. During the next two months, investors had better make gradual gold purchases, which would result in a good average price. Methods of accumulation are most appropriate as well. Among them, gold funds are an excellent option, as they are virtually risk free.
This optimistic view is based on the comparison with the 2008 fall in gold price. Gold lost abruptly 30% of its price in 2008 and investors have every right to argue that it was the roughest downwards correction the market saw. But analysts point out that all other assets except for gold went through worse decreases at that time. And gold was the first to resume its growth in price afterwards. Gold ended the year 2008 with an approximate increase of 5% in value. If the bigger picture is considered, gold is constantly increasing in value since February 2001, considering that the 2008 decrease ended on an up-note. In the 3 years that have passed since 2008, gold has in fact risen by a stunning 170%.
Today's general volatility of the markets in an uncertain environment is not enough to proclaim a bubble, despite some eager voices. The last known bull market for gold before a bubble occurred was in the seventies and the level of volatility that gold market showed back then was significantly higher than that of now. Gold fell 50% in 1074, before rising to record values. But the fall spread anxiety among investors and many left the market before gold attained its record price and the steadier investors got their substantial rewards.
Analysts explain gold at this moment as being near a normal high area within a major uptrend. The moment of weakness that gold experiences now is bound to pass and explosive activity is not expected to occur but after this phase. Gold might further decline in the next two months but it would not reach worrying low levels. A decline stronger than 50%, which would justify inquietudes concerning the end of the bull market, is not expected to occur anywhere soon.
So, we are dealing with a healthy manifestation in the gold market. During the next two months, investors had better make gradual gold purchases, which would result in a good average price. Methods of accumulation are most appropriate as well. Among them, gold funds are an excellent option, as they are virtually risk free.
About the Author:
Against the potential erosion of the purchasing power of the flat money, investors seek preservation of capital in gold, which opportunity is offered them by the Hinde Capital gold funds.
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