Speaking of learning the lessons of history, those who are interested in business & investing might want to take a look at the history of the Gold Market. Today's Gold market is very similar to the Gold Market of 1979.
1979 was the 3rd year of the Jimmy Carter administration in America, just as 2011 is the third year of the Obama administration. Like Obama, Carter also pursued big federal policies, with lots of central planning and spending from Washington. And, like the Obama years, the Carter years also saw a dramatic bull market in Gold prices.
Right now, in early September 2011, many market pundits are saying the the Gold market has peaked. They say that the rally from $1,400 - $1,800 was the final "blowoff" that marks the top in Gold. While it is true that bull markets tend to end with a bang, called a "blowoff", the move from $1,400 to $1,800 was not large enough to mark the final blowoff of this bull market.
The move from $1,400 to $1,800 was a move of 29%. Compared to the final blowoff of the 1970's Gold market, that move is not large enough to constitute a top in the market. The 1970's Gold market ended with a much larger BANG than that. It peaked in January 1980, after a 200% move during the last months of 1979. That's right, even investors who missed the move in Gold prices between 1970 and September of 1979 still could've participated in the final 200% move, which marked the real "blowoff top" and final peak of that long bull market.
As a matter of fact, a closer look at the Gold market of 1979 reveals that there was a move of nearly 30%, ending in a brief pause during early September 1979, almost exactly the same as what has happened during the past four months of this year's Gold market. As the chart shows, Gold went from about $250 to $320 between April 1979 and September 1979. That is roughly a 28% move, almost identical to the move from $1,400 to $1,800 between April 2011 and September 2011, which clocks in at 29%. And, as the chart reveals, there was also a brief correction, a pause in the bull market, during early September 1979. Sound familiar?
In 1979, Gold proceeded to go from $300 almost all the way to $900 during the period from September 1979 to January 1980, the year that Reagan beat Carter for the White House. History has a way of repeating itself, and if history is any guide, then we are about to see a rare site in the capital markets. Like a distant supernova that is a rare treat to astronomers, the next few months could provide a unique opportunity for investors ... the real "blowoff top" of a decade long bull market in Gold prices!
Thanks to www.chartsrus.com for publishing this great, free chart of the 1979-1980 peak in the Gold market!
http://www.chartsrus.com/chart.php?image=http%3A%2F%2Fwww.sharelynx.com%2Fchartsfixed%2FGC1982btm.gif
