Experts: Gold ‘Still in a Super Bull Market’

Thursday, 19 Jan 2012 08:13 AM

By Forrest Jones

Gold may have dropped 21 percent in the fourth quarter of 2011 but such corrections,
albeit scary, are normal for assets experiencing long periods of strong gains
made bumpy by speculators, experts say.

Gold is already up five percent in the new year, compared to a 3.9 percent
return for the S&P 500 index, and despite the plunges late last year, gold
finished 2011 up 10 percent.

Stocks were largely flat last year.

“In my view, gold is still very much in a super bull market,” says
Alan Newman, who has long recommended the metal in his CrossCurrents
newsletter, CNBC reports.

“Last year’s activity was quite normal for a super bull market, in which
corrections are supposed to be scary.”

Gold tends to drop in January, falling 8 percent in January 2011 and 12 percent
in two weeks at the end of 2009.

In 2011, it came in December as investors wanted it off their books.

Still, analysts at global financial institution Goldman Sachs say gold will
climb in 2012 as will copper and oil.

“The economic data and outlook beyond Europe in the U.S. and Asia has been
improving, shifting demand risks to the upside,” Goldman says in a report,
according to Bloomberg.

“We view gold and copper as providing the best value opportunities
relative to our view of fundamentals in 2012.”

Loose monetary policies in the U.S. and around the world have flooded the
global financial system with paper currencies, and it will take time to mop up
all that liquidity.

Weaker paper currencies — the dollar especially — often sends gold rising.

“The balance sheets of the Federal Reserve and ECB have never been greater
and both will continue to increase in size,” says Peter Boockvar of Miller
Tabak, CNBC adds.

“The Bank of Japan, the Bank of England and the Swiss National Bank
continue to print large amounts of money. As long as ‘print and inflate’ is
policy this bull market in gold will continue.”

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