As bad as today was, in the big picture this correction is still a blip…

Mark Lundeen...

Hi Bill

The people looking at the gold market as if it’s a deflating bubble are ignorant, or more likely ignorant and lazy. I took end of week prices for the Dow Jones, NASDAQ and the price of gold, starting from their first week of their bull markets. August 1982 for the Dow Jones and the NASDAQ, and February 2001 for gold, indexed their prices, and plotted them by the number of weeks their bull markets have traveled in time. The Data for the stock indexes stop in February 2002, so we don’t see their 2007 tops.

When compared to the 1980-90s stock market, gold maybe out performing them at this time, but not by much. The price of gold (my green plot above) must go much higher before we can even think of it in terms of overvaluation. Also, gold today is news for being down a few percentage points, CNBC is doing their best to start a stampede in the gold markets. But when shares of Wells Fargo, or some other financial stock goes down a similar percentage, they seldom even bother to mention it.

Mark