Gold isn't in a bull market. It's essentially been a flat market since September of 2011. This isn't an inherently bad thing, but it's unavoidable if we just spend a few seconds looking at essentially any chart of the metal -- the trend is downward with some upswings, and not the other way around.
For context, gold is now officially down for 2012, priced in dollars. Priced in Indian currency, it just recently hit an all-time high.
But wait, what? Why would I even point out the Indian currency? Because one of the biggest blindsides for investors looking to evaluate assets -- especially gold -- is looking at the market only through dollar-colored glasses.
Don't read this as a blind-faith trust in gold profits, of course. There's still a good chance over the next year or so that we'll see a very, very heavy correction in gold prices.
Why is Gold In a "Flat Market"?
Gold's in a flat market right now not because the risk of long-term debt for the US is dropping. Not because the dollar's long-term prospects look amazing. Not because people are no longer looking for hard assets for the sake of long-tem financial security.
Gold is in a flat market priced in dollars, but is just as flat priced in Euros, is still mostly up priced in Rubles, still getting pummeled in the Yen, just set all-time highs priced in the Brazilian Real, and just set an all-time high in the Indian Rupee.
The reason the discrepancy is that different currencies are bouncing back in different ways. Like it or not, the dollar is the world reserve currency right now -- and is a safe-haven for the short term.
In the summer of 2011, there was some fear of a U.S. default, which sent gold prices in overreaction mode priced in dollars and several other currencies. That's why prices skyrocketed up. With the exception of that huge spike, the overall trend is still mostly upward bound.
No, Gold's "Price" Isn't Down Like It Looks
Demand for physical gold -- which is the steady undercurrent with plenty of speculator noise on top -- is still growing by insane amounts as the Chinese are realizing that printing money is inflationary, the world realizes that the global banking cartels are running out of bullets, and investors brace for the end of the dollar as the world reserve currency.
Physical gold demand is stronger than the overall price of gold because of plenty of short-term speculations. This isn't to imply that speculations don't count -- they do, but only in the shorter run. If the people -- like myself -- who buy physical bullion never let up, then the future of gold will be strong.
The gold and silver market both have a lot of noise in them because of currency exchange worries, speculators making huge dents because of no fundamental income from the gold, and the fact that the gold market looks like it was invented to display George Soros' theory of reflexivity for all to see.
The long-term prospects are fundamentally unchanged for the physical stuff, and I'm planning on buying more regularly. There might be a speculator-fueled correction within the next year, but I'll simply be going shopping during said correction.
Over the next decade, we'll likely be seeing gold continue the bull market as the world banks erode their currencies, the dollar continues its inevitable decline, and the world realizes that sometimes you have to pay the piper.
I've said it before in my article "Keynes is Dead", and I'll say it again -- the ecnomic policies of Keynesianism have utterly failed, and the world is slowly realizing this.
The economic principles of alternative schools are slowly being analyzed, and the future of the world economy will likely be more radical to go along with the Modern Monetary Theory or more radical to go with the Austrian School, because one thing is certain: our economic and monetary structure is broken.
Regardless of which political side wins, the long-term winner is gold.