Gold Prices Will Rise This Fall

In his latest article Clif Droke explains why he believes gold prices will rise this fall. And guess what! It has nothing to do with another round of quantitative easing. Droke believes that during an election year, barring an all-out economic collapse, QE is far too controversial. However, Droke believes that “by this fall gold will be poised to benefit from both a relative strength increase as well as an historic long-term “oversold” signal.”


Droke believes that we will likely see a turnaround in gold’s relative strength. He believes this turnaround would attract hedge fund investors much like in late 2008. Droke likens the fall of 2012 to the latter part of 2008, where gold’s relative strength to equities made the precious metal extremely attractive to market moving hedge funds. And, following the inflow of hedge fund capital, and QE, gold rallied to new highs in 2009 through 2011.


Interestingly enough, Droke believes that in 2013 there is potential for a few different crises, which would ultimately lead to gold (once again) becoming the safe haven asset of choice. He states “I’m referring to the European debt problem, China’s economic slowdown, and the coming U.S. tax increases of 2013-2014. Gold will once again resume its traditional safe haven role once the concern over these problems reaches the boiling point and morphs into full-fledged fear.”


Droke explains that over the 60 year economic cycle, there are two moments when gold becomes the most desirable asset to own. The first moment in time is when “runaway inflation reaches its apogee” and the second is “the trough of the cycle when extreme deflation is at its worse.” Droke strongly believes that the deflationary headwinds we have been experiencing over the last several months will peak in the near future.


Click here to read Clif Droke’s latest article.