Traditionally when does Gold rise and when does it fall? What economic indicators predict gold prices? In this article Robert Prechter looks at the economy and Gold Prices. ~ editor
By EWI President Robert Prechter
…If gold isn’t going up when the economy is contracting, when is it going up? Table 4 (see chart on p. 24 of this free Club EWI report ~ editor) answers the question: All the huge gains in gold have come while the economy was expanding. This is true of the three most dramatic gold gains of the past century:
(1) Congress changed the official price of gold from $20.67 to $35 per ounce in 1934, during an economic expansion. The gain against the dollar was 69 percent.
(2) The entire bull market from 1970 to 1980 occurred during an economic expansion… [Of] the $815 per ounce that gold rose from 1970 to 1980, $725 worth of it came while the economy was expanding.
(3) The entire bull market from 2001 to the present occurred during an economic expansion… [Of] the $748 per ounce that gold has risen since February 2001, $726 worth of it has come while the economy was expanding.
Even lesser rises in gold, such as the two big rallies during the 1980s, came during economic expansions. So the biggest gains in gold, by far, have occurred while the economy was in expansion, not contraction.
Why is such the case? More…