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Is the bull market in gold over?

Not by a long shot. If anything, this latest pullback is just a healthy correction during a once in a lifetime bull run.

The reality is that gold is a very small asset class. Collectively the market cap of the entire gold mining sector is just $600 billion. To put that into perspective, it’s roughly 1% the size of the stock market.

As a result of its small size, when gold enters a major bull market, prices can go much farther than most investors realize. All you need is 1% of the capital allocated in stocks to shift to gold and you’re looking at a 100% increase in the entire mining sector.

And investors are allocating a heck of a lot more capital to gold than 1% of their stock portfolios. Indeed, multiple Wall Street firms are now suggesting that investors shift from a 60/40 stocks to bonds allocation to a 60/20/20 stocks, bonds, precious metals allocation.

Wall Street is not the group moving large pools of capital into gold. Central banks are buying over 1,000 tons of gold per year. As a result of this, for the first time since the mid-1990s, central banks own more gold than U.S. Treasuries as a percentage of their balance sheets.

Put simply, the largest pools of capital are now moving into one of the tiniest asset classes in the financial system. In this context, the bull market is nowhere near over.

Indeed, this latest pullback has simply seen gold drop to test its 21-day exponential moving average (EMA). This is a perfectly normal development in the context of a bull market… especially when you consider just how overextended gold had become from its primary trend.

So how high can gold go before this bull market ends?

During the last major gold bull market in the 1970s, gold rose nearly 2000% from the start in 1970 to its peak in 1980.

Now consider that since 2008, when the Fed first started printing money to paper over the debts in the financial system, gold is up a mere 375%. I’m not saying gold will repeat its gains of 2,000% from the 1970s… but the point stands that we’re likely in the first few innings of this new bull market.

So if you missed this first run in gold, do NOT despair… the largest, most life-changing gains are likely yet to come!

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