When prices are still up 45% (SLV) and 26% (GLD) over the past 12 months, I would call it a correction.
You developped a model explaining gold price as a function of real interest rates. How about a major bout of deflation ahead that will make real rates higher? That happened in Japan and could happen here. How will that affect gold price according to your model ???
Not my model (I reproduced it from Crossing Wall Street), but that would imply the price goes down. A definite possibility.
Thanks Jake, so much
http://krugman.blogs.nytimes.com/2011/09/23/the-low-inflation-trap-slightly-wonkish/ According to this latest Krugman piece, real rises may rise very soon
He's written about this in the past as well. Here was my take on it: http://tinyurl.com/yjq7gs6
I would have to disagree with part of your analysis. $GLD is still in correction mode down only ~14.5% since YTD high. BUT $SLV is DEFINITELY in crash mode, down over 40% since the YTD high. It does not matter how much gains they have had, they've sold off and have been classified as such.
good perspective on GLD and SLV - you go back just a year and it validates this is correction instead of crash. go back many more years and the same conclusion is drawn. Dramatic in the short-term absolutely - but in long-term chart -not so much.www.takingmoneyseriously.blogspot.com