Goldbugs will have their revenge in 2014

Posted on 25 December 2013 with 1 comment from readers

It’s been a horrible year to be invested in gold but big corrections in long bull markets are pretty common and often preceed the final and greatest stage of the bull market. Once you actually can see this spike in prices then the ArabianMoney investment newsletter will be advising its readers to sell, but not this yuletide.

On the contrary the New Year special edition of this popular store of investment advice (subscribe here, we can’t give this exclusive content away) will be explaining to its readers how best to gear up for the next phase of the bull market in gold, albeit we might still have a few rough months ahead as the correction finds its true bottom.

Unlucky for some

However, long bull markets like the one we have seen in gold for the past 13 years almost always end in a magnificent price spike. Think of the Nasdaq in 2000, not forgetting its 40 per cent correction in 1998. What about oil’s fall from $80 in 2006 to $50 in 2007 and then its rocket to the moon with $147 in July 2008?

Gold still has that new all-time high to come. By then everybody will be buying it as a no-can-lose proposition. That will be the time to quietly tie-toe out of the backdoor. Our investment newsletter will let its lucky investors in on the news that the party is almost over but we reckon most will still stay until the sheriff shows up.

How high will gold fly? If past precedent for three to five times as the moonshot is repeated then $3,500 to $6,000 is the range to be selling, not before. So ArabianMoney is happy to predict that in 2014 the goldbugs will have their revenge.

Bigger picture

Whether that will be quite the end of the story next year is more doubtful, the spike could play out over 18 months or a little more. Still for those who have kept their nerve and focused on the macro picture of money printing by all the central banks and ignored the noise of the crowd losing the plot so much to the good.

Remember what happens to gold prices when bond markets tank and equities fall out of fashion. It’s back to the late 1970s when this last happened and gold quadrupled in price.

Bad luck if you sold out in the panic of 2013, unlucky for some!