You know I’ve been fighting the gold bugs for a long time. Gold is an inflation hedge, not a deflation hedge. Turn to gold for safety during a deflationary period and you’ll get your ass handed to you on a golden platter!
Gold is simply another commodity and it burst in the 30-year cycle top between 2008 and 2011, just like it did after the 1980 top.
But my bubble model projected that gold would fall to at least $700 and possibly as low as $400 to $450 per ounce…
If that were going to happen, it should have happened by now.
It hasn’t.
Instead, gold has formed a strong base at $1,050, moving sideways for three years now.
Same with Bitcoin…
Bitcoin bubble burst in December 2017. My model suggested that the crypto could have dropped to $1,000 by now, but it hasn’t. It has formed an even more convincing base at around $6,000.
Look at this chart, but when you do, note that bitcoin and gold are on very different time scales.
Does this mean my model doesn’t work?
No.
There are always exceptions to the rule. And my bubble models, since I introduced them in The Sale of a Lifetime’s Lost Chapter and Zero Hour, have been working very well for almost all stock, commodity, and real estate markets.
Besides, my model is more sophisticated than the simple “orgasm” trajectory I showed on the chart above.
So, what is this potentially telling us?
It’s telling us that gold still has some perceived value as a money or crisis hedge… and bitcoin/cryptocurrencies are the new up-and-comers in this arena and competing with gold.
The markets haven’t sorted this out yet, but these two commodities are trading differently than the others and that’s potentially bullish.
Gold could still falter to a greater degree in the next financial crisis when deflation rears its ugly head much more than it did last time. In that case, my new target would be more the $700 level rather than $450.
