The reasons why this gold bull is very different

Something is afoot with gold.

Before analysing the mystery, a question. Is gold overpriced?

The World Gold Council estimates that 6.8 billion ounces of gold are above ground. They are in jewellery, central bank reserves, bars, coins and exchange traded funds. At current prices, all this gold is worth $14.9 trillion.

The market capitalisation of “Magnificent Seven” stocks is $13.7 trillion. Either Microsoft, Apple, Nividia and the others are too expensive or gold is cheap.

Source Khaleej Times – Jewellery consumers in Dubai and India are resisting record prices.

The vast majority of analysts, traders and bankers are bullish. That may be a yellow warning light. A few expect bullion to rise to $2,500 an ounce. They cite favourable financial conditions. The Swiss National Bank is the first major central bank to cut interest rates. The US Federal Reserve Board and other central banks are forecast to follow. It’s an election year. Wars are dragging on.

After touching an all-time record of $2221 an ounce, gold has slipped below $2200. To sustain the upward trend gold must break through the barrier again. It should then remain there and be ready for another run.

The bull ring flags are intriguing. Dealers in the know aren’t telling.

“The stealth rally has caught Western forecasters by surprise,” says Ross Norman, CEO, Metals Daily and a former bullion dealer. “It suggests to me that the buying is beyond the purview of most of us.”

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