Friday, September 23, 2011

It's Not a Crash...

When prices are still up 45% (SLV) and 26% (GLD) over the past 12 months, I would call it a correction.



That's not to say it doesn't have risk to the downside (see Gold Prices Can Go Down).

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7 comments:

  1. DoubterSeptember 23, 2011 at 10:06 AM

    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 ???

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  2. JakeSeptember 23, 2011 at 10:33 AM

    Not my model (I reproduced it from Crossing Wall Street), but that would imply the price goes down. A definite possibility.

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  3. EconomicDisconnectSeptember 23, 2011 at 8:04 PM

    Thanks Jake, so much

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  4. ChicaSeptember 24, 2011 at 12:57 AM

    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

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  5. JakeSeptember 24, 2011 at 6:59 AM

    He's written about this in the past as well. Here was my take on it: http://tinyurl.com/yjq7gs6

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  6. TheArmoTraderSeptember 25, 2011 at 11:01 AM

    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.

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  7. takingmoneyseriouslySeptember 25, 2011 at 4:20 PM

    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

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