I appeared on Fox Business recently to discuss the recent pullback in gold. Since soaring to a record high $1,900 an ounce, gold has declined more than 15 percent, prompting naysayers to declare an end to the gold secular bull market. Host Charles Payne asked me if the yellow metal could fall to $1,400 or even $1,300 an ounce.
As I explained to Charles, gold’s bull market is still on course with plenty of room for growth. I consider it a non-event for gold to drop 15 percent. This type of correction reflects the normal volatility inherent in bullion’s DNA. This volatility also brings a tremendous buying opportunity for investors to purchase gold at substantially cheaper prices.
Gold’s short-term and long-term drivers remain intact. Money supply in the world’s largest countries is expanding by roughly 18 percent. Countries like the U.S. and Europe are continuing to print paper, while holding interest rates near zero, as they grapple with debt issues.
Furthermore, nearly 50 percent of the world’s population believes in giving gold for holidays, birthdays and anniversaries. With rising GDP per capita in emerging markets such as China and India, these countries have burgeoning middle classes with a cultural affinity for gold. These fundamentals are all indicators for higher bullion prices.
Watch here as I discuss the Fear Trade and Love Trade.
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The following securities mentioned in the interview were held by one or more of U.S. Global Investors Fund as of 09/30/11: Barrick Gold Corp, Freeport-McMoRan Copper & Gold Inc, Goldcorp Inc, Newmont Mining Corp, Randgold Resources Ltd and Yamana Gold Inc.
