Many market participants are expecting a correction in gold at the psychological position of $1,600 or oz. This is barely likely provided corrections many times take location subsequent to reaching record round no. Also, corrections tend to happen when there is very many of noise within the press and media. Gold's record high in all currencies is front page news within the about insurance currently which should make any contrarian nervous that the recent move is overdone. However, coverage remains very muted in many regarding the non specialist financial press many of whom barely covered or did not even mention the new record gold highs.
The person or woman within the street, in Europe and many regarding the western world, remain blissfully unaware of gold's rising cost and unaware of gold's importance like a save of wealth and an important diversification. Gold is not overvalued mostly within the long term but even within the brief term. Gold at $1,603 or oz is only 2. 5% above the recent record nominal cost seen on April 29th at $1,563. Thus, gold has had a 3 month correction and consolidation prior to reaching the new nominal highs over $1,600 or oz.
Year to date in 2011, gold is only 13% higher in dollars, 7% in euros and 9. 4% higher in sterling. Therefore, it is barely likely that gold targets the next psychological position of $1,700 or oz, prior to any meaningful correction. Higher prices in euros and pounds are mostly likely, prior to a correction. It is worth remembering that within the 1970s gold bull market, gold had annual appreciation of some 30% per annum and had moves of over 73% in 1973 and 66% in 1974 look table above.
Gold only went parabolic in 1979 when it rose by over 140%. The conditions currently are worse than the 1970s when the USA was a net creditor nation and not a net debtor nation the largest debtor nation the globe has ever seen. Armageddon' was warned of by President Obama if the United States fails to raise its debt ceiling. This should be hyperbole used in debt ceiling negotiations with obstinate Republicans but there exists many banking analysts, economists and leading financial experts the ones that predicted the crisis and the continuing crisis who concur with the American President and are genuinely concerned of an economic meltdown. We are an extended method from gold mania yet and gold coverage within the non specialist financial press remains muted despite the done storm' for rising gold prices.
More importantly, gold and silver bullion ownership between the population remains very low. As ever, investors should be better served buying gold and silver on the dips and dollar euro, pound and Swiss franc price averaging into allocations. Attempting to time corrections and speculate on brief term moves is extremely difficult and should be avoided by retail investors and all but the highest many experienced traders.
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