Why Are Gold Investors Bailing Out?

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By Jacob Maslow

Bear Market Trend
A literal depiction of a typical bear market showing statuettes cast in gold.

There is definitely a bear market in the gold space currently. There is no way to deny this. Ever since its high at the end of the year 2012, gold has declined by $500. That is a whopping butt-kicking if you ask me. It appears that the much anticipated stock market crash that many bears have been predicting for many years is taking its time.

If you are a gold player, take heart from the fact that the last time there was a massive correction in the NASDAQ, it took about four years for the stock bubble to finally burst. I am, of course, talking about the first Dot Com crash. Alan Greenspan issued a warning against irrational exuberance in 1996 and, from that time, the NASDAQ quadrupled before exploding and losing 80% of its value. What I’m saying to gold traders is that it may seem foolish to hang on to your gold positions now that gold has crashed by $500 since the end of 2012. However, the current stock market bubbles can’t continue for far too long.

Pay attention to my use of the plural form of “bubble”. There are many bubbles keeping up Wall Street. We are talking about the US Federal Reserve quantitative easing bubble, the tech bubble which is primarily a product of the biotech bubble, and finally the overall global bubble as experienced in irrational market appreciation in otherwise lackluster economies in the third world.

If you put all these bubbles together, this impending crash is going to be the mother of all economic crashes. Official state bank interventions will be very very hard to pull off especially once the general investing market’s confidence in such schemes evaporates overnight. Regardless, gold bugs have been moving in to cash, and they are cashing out of gold at record rates. It is going to be very interesting whether or not gold bullion can rally back.

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