The Battle Between Nominal & Virtual

QUESTION: Dear Marty,

With regard Gold, on May 2, 2103 you wrote “Don’t forget, gold has yet to test the 1980 high adjusted for inflation which standards at about $2300 level”.

On June 20, 2013 you wrote “A weekly closing beneath that level opens the door to a test of the 939.50 level”.

Your adjusted for inflation May 2 statement does make sense to me.  However, if we are looking at a 939.50 low should that also be adjusted for inflation and if so, by how much?

Having asked that question, I do not remember you mentioning inflation when you predicted here in Vancouver, Canada that Gold would have to go through 256.00 before it could resume a gold-bull-market!  Although this was many years ago, I thank you forever for that prediction.

Gold-1982-1991

ANSWER: In this upcoming report on the Dow & Real Estate, I have covered in detail the question of International Value and how it drives markets and International Capital Flows. I have stated many times that to create a REAL bull market, something must be rising in terms of ALL currencies. That is why there was a bubble in Japan in 1989 and the Dow for 1929. The currency and the market were rising and this attracts capital globally causing it to concentrate in that nation and sector. It is International Arbitrage. Here are the charts we illustrated back then stating gold had to break to new lows going into 1999. We achieved that requirement breaking $256 reaching $250.60 in 1999.

GC-1982 Dollars

 

This chart illustrates that gold has not been the hedge against inflation. All commodities will surge rapidly playing catch up. This is how they perform that is different from currency and shares. This view of gold failing to exceed the 1980 high illustrates that it was NOT breaking out as was the case going into 1980. It will do so, but it was not ready for prime time just yet. We are in a NORMAL correction mode. It is unfortunate that there are so many Gold Promoters who harm people by spouting out total nonsense. It is simply sophistry.

Gold will not be ready for prime time as long as this sophistry is about missing gold in Fort Knox that cannot be proven, the hedge against inflation that gold does not provide looking at the Dow was 1,000 in 1980 and is now 16,000 and gold is heading lower to about 60% of the Dow. REAL money will not buy this type of crazy analysis. They want real facts that build confidence.

This is the battle between looking and trading thing in nominal terms and the world of virtual international value