How A Gold Bull Market Really Works
Several investors today are referring to the current gold market as a gold bull market, which has many people confused as to what exactly they mean. A gold bull market simply refers to a time when gold is in high demand and is more sought after than any other specific stocks, bonds, or investments.
The latest gold rush is quickly becoming the largest in the history of the world, but it isn’t happening out in the desert, in once small California towns or in the mountains like gold rushes from days gone past. This gold rush is happening all over the world, with people buying gold in such large quantities because they fear for their own financial well being in the future.
During a gold bull market, Wall Street will be the focus of the gold rush, and the mania surrounding the coin and bullion buying is what will drive the prices higher and higher for a long time to come. Gold easily peaked at over $1,000 in 2008, and is expected to continue to climb steadily in a very quick, almost vertical increase at some point. Some experts are even speculating that gold could easily get higher than $5,000. And that is the per ounce price, of course. There was a bull market back in the 1970s, and the gold price increased over the months by more than 1800%. If that happens again in today’s market, gold could easily get higher than $5,000 per ounce.
A gold bull market has three different stages that it goes through. These stages will occur in sequence, generally starting with the currency deflation stage, then moving on to the investment demand stage, and ending with the mania stage. Today’s market has already seen the first two stages of this gold bull market. The bull market first causes gold prices to increase because of the dollar value decreasing. After that point, gold prices continue to rise, but this time because more people want to invest in it, likely due to the first stage which decreased the value of the dollar.
The final stage of the gold bull market is the mania. This is the time when everyone rushes to buy all of the gold that they can, out of fear, excitement, and many other feelings related to the slowing economy and the rising gold prices. This stage has yet to completely arrive, but it is well on its way. Many people are already experiencing the effects of the gold bull market. Dealers can’t get their hands on as much gold as they used to, and people are seeing higher premiums when they buy gold from dealers. In time, this is only going to be a bigger issue because of the looming mania stage that will soon prevail in the world of gold investing.