Whilst the investment herd currently believes that the bull market in gold that began in the year 2000 is over, here at Fat Prophets we are not convinced. With money printing and quantitative easing by Central Banks across the globe set to continue we believe that the gold price is simply gathering energy for a major rally.
Right now the gold sector is extremely undervalued and quality companies can now be bought for the cheapest valuations in years. Is this opportunity worth acting upon? In short, yes!
History is always a great teacher and during the last great bull market in gold in the 1970s - which was triggered by rampant inflation - the gold price embarked on a huge run, shown below. During this 10 year period the price of gold climbed from around US$35 per ounce to eventually reach US$850 per ounce in 1980.
No trend is linear and during this run - in mid 1970s - many doubted that the bull market in gold would keep going. In 1975/76 with the gold price at US$200 per ounce bearish sentiment took hold and the gold price fell by 50% to US$100 per ounce. This negativity towards gold did not last for long and with corrective phase over, the price than exploded eightfold to more than US$800 as the public participated en masse.
There are many parallels which can be drawn with the current plight of gold. With gold having corrected nearly 50% over the last 2 years we believe it is only a matter of time before history repeats itself and gold explodes to the upside once again.
RRL Price at posting:
$2.90 Sentiment: Buy Disclosure: Held
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