Now, gold is revisiting ... lofty levels and, in the process, catching a lot of interest from a number of sources, not the least those who are surprised that bullion is rising at the same time as the U.S. dollar is appreciating.
According to hitherto conventional thinking, that shouldn't happen.
Myles Zyblock, chief institutional strategist at RBC Dominion Securities Inc., recently authored an extensive report on gold that suggested, among other things, that "there has been a significant portfolio shift out of financial assets and into tangible assets" and the shift began in 2000, just as the tech bubble was set to explode.
In the intervening period, gold has climbed about 74 per cent while the Dow Jones industrial average has fallen about 1 per cent, a development that he attributes to a rise in investors' risk aversion.
"Gold is now in its fifth year of a secular bull market, and if history acts as a useful guide, we could quite easily see another three to five years of solid performance from gold and gold shares," he said.
I disagree with this last statement that a secular bull market will only last three to five years. Typically, they can go 10 to 15 years. Just look at the NASDAQ from 1990 to 2000. We're already 5 years into the bull market in gold which started in 2000 and the price of gold has doubled.
Cl�ment Gignac, chief economist and strategist at National Bank Financial, believes that bullion will climb to $600 in the next 12 to 15 months. And he cautions that is only an "intermediate target," which he will reassess when the time comes. If, as he thinks may happen, the Organization of Petroleum Exporting Countries eventually starts worrying about a weakening U.S. dollar and opts to protect its purchasing power by quoting the price of oil in a basket of currencies rather than just the greenback, then bullion could climb even further.
But the bulk of his bullish case for gold stems from a feeling that the peak in real estate south of the border is behind us -- which, along with rising interest rates, is bad news for the U.S. economy, and by extension the U.S. dollar, but good for gold.
Gold..if you don't have it, get it.
