The gold market is making a nice little plunge today back to the $850 level. Take a look at this chart. From 1998 to March 2008 gold made as perfectly formed and complete a bull market as you could imagine:

In my mind, the support line for gold lies around $600 or slightly under — just cut off the blow-off top on the chart and extend the trend line from the early years of the bull. The inflation scare of 2005 to last summer is all but over now that we are in the most powerful deflationary environment since the 1930s.

I welcome this fall in gold, and so should everyone who has cash, because that cash will be destroyed by the actions of our governments over the next several years. Lower gold prices mean that you can bail out of your paper money for real money at very favorable exchange rates.

Enjoy deflation while it lasts.

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