E What If Gold Is Not In A New Bull Market?

What if it's not a new bull market for gold? What if gold prices are going lower - not higher?

Think it can't happen? Think again.

In December 1987, gold prices stood at just over $500.00 per ounce. They had been on a tear for the previous three years after hitting a post-peak low of just under $300.00 per ounce in February 1985.

The increase in gold's price of $200.00 per ounce may not sound like much, but it represents a sixty-seven percent increase over that three year period. Coming on the heels of a similar percentage decline after reaching an all-time high of $850.00 per ounce in January 1980, it was a welcome salve for those who had been wounded so severely.

Proclamations of a new bull market were abundant. Expectations for exceeding the old highs had some investors fantasizing rabidly. They were rudely disappointed.

Within eleven months, gold's price was back below $400.00. By November 1988, gold was at $390.00 per ounce, a decline of twenty-two percent. It didn't stop there.

A pattern of sideways to lower prices continued until August 1999, when gold traded at $256.00 per ounce - twelve years after its post-peak recovery high of $502.00 per ounce. That is a decline of nearly fifty-percent for the twelve years and a decline of seventy percent from its then all-time peak of $850.00 per ounce.

All told, the bear market for gold prices lasted twenty years; and even after reaching its low of $256.00 per ounce, it did not trade above $300.00 per ounce for most of the next three years.

On the chart below, a one-hundred-year history of gold prices, there is a box around the years and price action of gold from January 1980 to December 1987. There is another box around the years which include gold's price peak in August 2011 and it's recent high of $1545.00 in August 2019.

Both periods are identical in length - eight years. Also, both periods began with all-time highs and included low-points and intermediate recovery high points which occurred over similar time frames...

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Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN'T, AND WHO'S RESPONSIBLE FOR IT and  more

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Old Time Investor 6 days ago Member's comment

Good article, I remember 1987 well.