Articles
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Gold's price action warrants attention
By examiner.com
Last month I discussed the temporary resolution of the fiscal cliff and the stock market. While the casual observer may posit that the stock market’s recent surge was a result of the temporary resolution, a chart technician would tell you that the trend was already up in that market. I do not believe in the causality of external action in the stock market.
The gold market, however, presents an interesting view into the potential future of stocks. In Escaping Oz, I described a multi-year credit bubble that infiltrated a variety of markets. Real estate was the most obvious example of a credit boom and bust. Commodities are another “cone” for excess credit. Recall the boom/bust experience of crude oil in 2008. Gold, while still the ultimate form of money, is a commodity and as such, is subject to the effects of excess credit. People use credit to buy gold. One of the important messages from Escaping Oz is how credit tends to deflate after a prolonged bubble. Three bubble-affected markets that have hung on are stocks, bonds, and gold.
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