Contrary to what a number of gold bugs have observed, other experts
believe recent drops in the gold price are not a bull market correction, but
rather reflect a market stuck in a commodity bear "super-cycle."
Coupled with a gloomy end-of-year outlook for stock markets, precious metals
and miners could be in for a rough Q4.
Referencing gold's "6% loss in a week's time," a CNBC report published on Oct. 7 quotes John LaForge, head
of real asset strategy for Wells Fargo: "Is the $60 drop in gold prices
the beginning of a deeper dive? Our answer is yes, it may very well be. .
.The history of gold, and commodity super-cycles, says that gold may very
well lose another $200/oz., testing the $1,050 level, before it is time to
buy again."
The suppression of the gold price stems from oversupply, according the
report. LaForge believes that, "enough gold has now been mined that were
all the above-ground gold distributed equally among the earth's human
inhabitants, each would receive 0.8 ounces of the precious metal�one of the
highest such amounts since 1950."
The bear super-cycle hits gold miners as well: The report also quotes
"trader and technical analyst, Todd Gordon, [who] says it's high time to
bet on more losses for the mining stocks."
The forecast isn't better for the stock markets, according to a Bloomberg report published Oct. 9. According to the
article, Goldman Sachs is forecasting a "bumpy ride into the end of the
year" for U.S. and European equities.
Goldman's managing director of portfolio strategy and asset allocation,
Christian Mueller-Glissmann, attributes the predicted slide in U.S. markets
to high valuations, according to Bloomberg. This means stocks at
"current levels can precipitate significant drops in the event of
shocks."
Potential shocks include the upcoming presidential election and the
Federal Reserve raising interest rates. In Europe, potential losses are
linked to the weak economy, according to Bloomberg.
Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC and
provides services to Streetwise Reports as an independent contractor.
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