PART IV

SPECIAL NOTE

Since my guides are no longer featured by eBay, future updates will be published no more frequently than quarterly.

JANUARY 2009 UPDATE

The Second Golden Bull

The Third Year, 2008

Compared to the Last Year of

The First Golden  Bull

1980 through March 1981

 THE 2007-08 and 1980-81 BULLION

Floating Bar Chart

copyright2009thmxs

A Comparison  - Three Month Moving Averages - September 2007 through December 2008 bullion price patterns (Black Bars) compared to January 1980 through March 1981 bullion price patterns (White Bars) 

 Believe it or not, there is not much difference in the results through December 2008, compared to the last Update, the results through October.

The three month moving average trend continues downward, now almost 15% below the March 2008 peak.  The pundits however, are now telling us to expect gold bullion to rise from the ashes as the dollar depreciates and the economy worsens.

I don't question their judgement in theory, but I continue to believe bullion is overvalued, based on historical results.  Bullion increases should correlate very nicely with increases in the Consumer Price Index (CPI).

Currently we are in a period of deflation.  This trend will reverse in time, but even when it does, the CPI would have to pop up 67% or more likely, the dollar devalued to 60% of current value, to justify a bullion price of $1,000.

But leave it up to fear, speculation and "momentum" to change the course of logic.  It happened in crude oil, in housing prices, in tech stocks, and many years ago, even in tulip bulbs.  It has already happened in the short history of free market gold.  Gold prices through 1980 went absolutely bonkers, up to 120% above any reasonable expectations of the day.

So again, leave it up the market to overreact today, tomorrow and perhaps forever.  Be careful when the move happens.  Be prepared to get out quickly (look at the 1980-81 charts), or expect quick and heavy losses unless of course, the dollar approaches the value of confetti.

What Does a Confetti Dollar Look Like?

Now You Know

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 Thank you for reading, thmxs01/12/2009

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