For some people, going to the beach this spring break is NOT about taking in UV rays from the sun. But rather, paying heed to Alpha/Beta Rays from clicking Geiger Counters.
“A New Gold Rush Is On,” announced a recent New York Times story. And, while the original 49’ers had covered wagons and shovels, the “08’ers” are combing the seashores and cruising down Route 49 with metal detectors and minivans. Last check: Membership to the Gold Prospectors Association of America soared 40%, while commercial land claims for gold mining exploded from 132 in 2005’s fourth quarter to 2,274 in 2008’s first quarter.
Elsewhere, reports tell of mining stores selling out of power sluices, jewelers melting down customers’ gold teeth, and young thrill seekers quitting their day jobs to scour the rivers of the Sierra Nevada in search of the next “Mother Lode.”
“I haven’t seen anything like this in nearly 30 years,” gasps one industry veteran. We “liken the current rush to the last time gold prices spiked this high, in the late 1970s, early 1980s.” (AP)
Make that “early 1980,” singular. After setting a new, all-time high at $850 an ounce in January, gold prices took step one DOWN in a relentless, 65%-plus sell off until 1982. For the next 25 years, the market would remain locked in an up-down battle for the $500 to $250 range.
It’s no surprise that today’s “experts” only recount the glory days of gold’s 1980 rush to a historic record, but nary a word about its ensuing collapse.
In Prechter’s Perspective, Bob Prechter describes a nerve-wracking speech he delivered to a gathering of gold bulls in June 1980, at a Canadian money conference. He warned that gold prices would fall “below $400” from their $850 peak. In Bob’s own words: “It was like talking to a brick wall.”
To learn how to get a FREE copy of Prechter's Perspective with valuable tri-weekly insights on gold, click here.
That same blind commitment to bullion’s bull market remains now. Designating 2008 as the start of the “New Gold Rush” blatantly ignores the old, “new” gold rush that came before.
The time: Summer 2006. Gold prices have risen above the $600 level for the first time in a quarter century. And in the eyes of the many, the second best tool for investing in the metal is -- a shovel. Alongside NBC’s profile of a California man digging a 60-foot hole in his front yard after an excited metal detector reading, we have: “Getting In On The Gold Rush” (CNN Money); “Rising gold prices pique interest in panning.” (USA Today); and, “The gold price will go to the stratosphere, like the tech era. You can get a $5,000 number.” (Forbes)
Yet -- at their May 12, 2006 peak, gold prices reversed, plunging headlong in a five-month, near $200 per ounce sell-off. A “complete shock” to the wound-licking public, the nosedive was exactly what our May 1, 2006 Elliott Wave Financial Forecast called for. In our words: “With a five-wave rally form the August 1999 low complete or very nearly so, we can turn our attention to the likely extent of the upcoming multi-month decline.”
Although the “abridged” version of history offered by the mainstream financial media does not say as much: Very often, when gold fever reaches a monumental high, so do gold prices.
Case in point: From its recent March 17, 2008 peak, the gold market shed more than 14% before turning slightly up on April 1. And, in the March 14 special Elliott Wave Theorist, Bob Prechter presented a compelling close-up of the metal and wrote: “If the relationship shown here holds true, and if gold behaves as it did in 1980, it should peak concurrently with the economy.”
Whether the decline since then is just a flash in the pan OR the start of something larger, our Financial Forecast Service publications have the original and objective story you won’t find anywhere else.
Learning more about the Financial Forecast Service's unique insights is easy. In fact, it's just a click away.