Explaining the gold bull market

valuecreator · Jun 6, 2013

Steve Saville
Posted Jun 5, 2013

One of the simplest and best ways to ascertain gold's long-term trend is to look at its performance relative to commodities in general.

This is because a genuine gold bull market will result in gold making higher highs and higher lows relative to most other commodities.

Alternatively, if gold is trending higher in nominal currency terms but not against most other commodities, then what we have is a general inflation-fueled commodity bull market (all long-term commodity bull markets are fueled by monetary inflation) with gold going along for the ride. In this latter case, the rise in the gold price is nothing more than an offset to the loss in purchasing power of the currency.

So, let's review gold's performance against the Continuous Commodity Index (CCI).

The following chart of the gold/CCI ratio makes it clear that a long-term gold bull market commenced at the beginning of 2001. The chart also makes it clear that gold's long-term bull market has contained substantial intermediate-term swings as well as multi-year periods of 'choppy' sideways movement.

In other words, despite the impression created by long-term charts of the US$ gold price, gold's progress since its early-2001 major bottom has been anything but steady.
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Essential Reading:

http://www.321gold.com/editorials/saville/saville060513.html

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Explaining the gold bull market

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Explaining the gold bull market

valuecreator Well-Known Member Silver Stacker

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