Why The Current Bull Market In Gold Is Bigger Than The One In The 1970s
By Simit Patel:According to Dow Theory, secular bull markets have three phases: The first phase is marked by slow appreciation of insiders and professionals; the second phase is characterized by more rapid appreciation, mainstream media coverage, and an increase in mass market investors; and the final phase is characterized by a parabolic mania. As the chart below illustrates, a case can be made that gold is about to enter phase three -- the mania phase.
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The fundamentals supporting a mania in gold (GLD) and gold stocks (GDX) remain intact, as the world is still awash in debt. Considerable weakness remains in the European and U.S. bond markets (long-dated Treasury bonds, as expressed by the iShares Barclays 20+ Year Treasury Bond ETF (TLT), are down nearly 7% year to date), likely the result of bond investors losing faith as $7.6 trillion in sovereign debt is maturing this year.Complete Story »
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