Gold: The Stages of a Mega-Bull Market

Posted Oct 26th 2010 10:30AM by Steven Halpern
Filed under: Major Movement, Newsletters, ETF Investing, Commodities, Stocks to Buy, Recession

gold "We hear that gold is in a bubble, it can't rise much further and so on," content resource experts Mary Anne and Pamela Aden.

The co-editors of The Aden Forecast explain, "Many wonder, why is it even rising so much? For that, you have to look at history from a global perspective and it'll provide the answer.

"We've often pointed out that gold is money. It has been for thousands of years. Paper money is not really money and there isn't one paper currency that has survived over time.

"Gold, on the other hand, has. It can't be created at will, it's durable and it's always maintained its purchasing power.

"With the U.S. is going overboard with massive deficit spending and out of control debts, the world is taking note. They don't want dollars, but they do want real money, which is gold. And that's why the dollar is falling and gold is soaring.

"Gold is in a mega bull market, and such markets have typical stages, or psychological steps that seem to always repeat. And since gold is in a solid 10 year mega bull market, it warrants taking a good look.

"First, the market will start rising steadily. That's when the so-called smart money buys. Then the institutions will get in. Next comes the media attention and we believe this is where gold is now -- between the Awareness Phase and the Mania Phase, which is likely just beginning.

"That's when the public starts to jump in. We're not there yet and it could take quite a while before this happens.

"These stages take time and it could still be years until gold reaches its ultimate peak. In the meantime, gold will keep rising.

"The last time this so obviously happened was with the stock market in the 1980s-90s. You'll remember that it took nearly 20 years for the frenzy to hit full speed in the late 1990s.

"At that time, everyone was talking about stocks. It was totally mainstream. People were quitting their jobs to trade stocks and get rich. This will happen again.

"It's the delusion phase, only this time it'll happen with gold, which has all the makings of a full blown mega bull market.

"Naturally, there will be corrections along the way. No market goes straight up, or straight down and the hardest part is to stay with it.

"We've been consistently recommending gold since 2002 and yes, there have been ups and down. But if you stay with this mega bull rise, we're sure that you'll be very glad you did.

"Gold had two corrections this year, in February losing 13.3% and in July when it was down 7.95%. Now the July low at $1162 is a key support level. That's how fast the bull is developing.

"For new buyers, our suggestion is to buy gradually this month and next. Buy gold, silver and the shares on weakness.

"Weakness this month or next will provide a great time to buy new positions. We recommend averaging into the market by buying new positions gradually, ideally on weakness.

"Among our favorite holdings are SPDR Gold Trust (GLD), Central Fund of Canada (CEF) and Central Gold Trust (GTU).

"Among individual mining stocks, we particularly like Silver Wheaton (SLW), Stillwater Mining (SWC), and Eldorado Gold (EGO)."

Steven Halpern's TheStockAdvisors.com offers a free daily review of the favorite stock ideas of the nation's top financial newsletter advisors.