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Why is the bullion bull market largely overlooked and under-invested?

*Barron's, by Michael Kahn, November 26, 2012

”Last week, while investors were enjoying a nice stock-market rally, gold quietly broke out to the upside.  After months of floundering, the yellow metal has now confirmed the resurgence of its long-term rising trend.

If there ever was an asset that embodied the spirit of Mark Twain’s famous quote, ‘The reports of my death have been greatly exaggerated,’ it is gold.  From calls of a burst bubble in September 2011 to an apparent, albeit incorrect, view of a major trend breakdown in May 2012, the precious metal has ignored the consensus opinion that its best days were behind it.

Analysts argued that low levels of inflation would render its hedging qualities unnecessary.  And a strong U.S. dollar, thanks to the continuing economic problems in Europe, would continue to pressure it.  Since the metal is priced in dollars, a rising dollar can buy more ounces of gold, all other factors held constant, and that results in lower prices.

Gold is now trading above its 50-day moving average for the first time in a month after recently bouncing off its longer 200-day average.

Its Nov. 23 gain also moved it above short-term resistance at $1,740 an ounce and confirmed the end of an October correction.  In Monday’s session, gold traded at $1,750, down slightly from Friday’s close.

The next hurdle for the market is in a zone around $1,800, a resistance level set by short-term highs made in November 2011, February 2012 and early last month.  If the bulls are successful there, I see no technical reason why it will not top last year’s all-time high of $1,923 within just a few months.

While gold is just now confirming its bullish tone here in the U.S., Europeans were already quite aware of its bull market. W hen priced in euros, gold moved to an all-time high in September of this year.”


*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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