Some pundits have called for the end to the gold bull market, or at the very least a long pullback period. There are three important points why I do not believe either case to be accurate, and I think continuing to buy or hold at this point is still the smartest thing to do.
1. Indians have been lured by the lower gold prices. Bullion imports in Abu Dhabi — a key middle East gold hub — surged 300% in August compared with the same month last year.
2. Gold has not dipped below it’s 21-month moving average since early on in the bull market in 2002. The 21-month MA is currently 790, and gold has been holding solid above 800.
3. The U.S. mint’s inventory of American eagles is down to zero. The mint is out of gold eagles, and many dealers have no supply of gold coins.
4. Late summer has been the worst time for gold over the course of this bull market, and Fall has been the time we’ve seen the biggest surges. We’re only two weeks away from the start of Fall, it would be foolish to sell now!
5. Gold has been held back due to the dollar rising. The dollar has risen due to a worldwide economic slowdown. This has nothing to do with the U.S. economy being strong. The fundamentals are still working against the dollar, and will eventually win out.