This past week’s dramatic gold-price action - with the metal falling some 5.8% from a Wednesday high of $1,790 an ounce to a low of $1,687 - does nothing to dissuade us from our super-bullish long-term view of gold-price prospects.
With the Greek drama taking an intermission and the euro strengthening at the US dollar's expense, it looks like gold wants to move higher – and has enough momentum to break through strong technical overhead resistance as we approach and possibly exceed $1,800 an ounce.
Despite the winding down of East Asia’s Lunar New Year gold buying binge, I expect the yellow metal’s price will continue to move up in the weeks ahead – but not without some struggle as gold works to reestablish upward momentum and renewed credibility.
Forecasters, whether of the economy, or the stock market, or the gold price are frequently wrong . . . but we are never in doubt. It is up to you - the investor - to listen, evaluate, doubt, and make your own decisions about gold's future price.
The explanation for gold's failure to move higher in recent weeks, following its spectacular rise earlier in the year, has much to do with which currency we choose as the numeraire or yardstick with which to measure gold's price.
While speculative pressures have pushed gold lower, physical demand has remained quite firm - not just from European's seeking a safe haven but, even more so, from Asian markets, particularly India and China.
Importantly, to the gold-price outlook, today's buyers, both private investors and central banks, are likely to be long-term holders. Much of this gold, once bought, is unlikely to be resold any time soon even at much higher price levels.
Contrary to some commentators who say "gold's extraordinary run is nearly over" or "the gold-price bubble will soon pop," I believe the yellow metal's price has far to go, perhaps to the end of the decade or even longer.
Despite gold's recent run up to new historic highs, I believe the yellow metal's price has far to go - both in future percentage appreciation and duration before the great gold bull market comes to its ultimate cyclical end.