Gold has been crushed this year because of the belief that the fed will begin to taper. This results in rising interest rates, a rising dollar, and a drop in gold prices. While I believe the fed has no intentions of taking their foot off the gas, they'll never take it off the table.
The taper is contingent on the unemployment rate. If you've been paying attention to earnings this year, many of the companies that have seen their stock go up are regularly missing on the top line, but they are hitting on the bottom line. These companies are improving profitability by cost cutting, which often means layoffs. If revenue is heading in the wrong direction, that either means margins are down or the demand isn't there or both. If demand is on the decline, you aren't going to hire.
The stock market drives our country. Every executive at a publicly traded company is finding a way to be more profitable and often times that means finding ways to replace people with technology.
The Amazon CEO wants to deliver our packages with drones. He envisions a world with drones flying through the sky delivering your package to your door on the day of your order. Now this is probably a long way off as these things could fall out of the sky and kill people, but it shows you thought process and where we are headed. The drones would replace how many FedEx and UPS workers?
I ultimately see unemployment getting much, much worse, which means no taper. If it becomes clear that the fed can't take their foot off the gas because they won't let the stock market tank, the dollar is ultimately going to tank. When that happens, gold will sky rocket.
I don't know if it will happen in 2014, or 2015, or 2016, etc., but as long as our economy revolves around the stock market and our corporate executives #1 priority remains shareholder value, I don't see how we avoid massive unemployment when companies are forced to beat earnings by driving down costs.
I actually think it would be good for gold if the fed ended the money pumping. The market would have a big correction. Big money would take their profits and go back to cash. Gold would also take a hit for maybe a month. Then I think money would pour back into gold as a safe haven while the rest of the market tanked back to around 12,00 for the dow. Gold would jump quickly back to 1700-2000.
I agree with you. Worst thing that has happened to gold during this decline is all the herky-jerky taper talk. Just do it -- the FED should have never done Q3, to start with -- and get the FED out of the markets.
I think in 2014 the market will continue to go up. It think gold can still go down. I'm just saying that I think it's inevitable that our currency tanks. In a perfect world you get in when it's time to get in and you take advantage of what's working now, I'm just saying that ultimately you'll get a very nice return on gold because I don't see how it doesn't go way up.