How will you know gold is peaking?

MoneyWeek – Three ways to tell when gold’s bull market is over.

Hint: we’re not even close yet. But one day it will be time to sell. That article has some insights on possible sell signals.

Incidentally, seeing people on TV hawking gold isn’t a sign of the peak. It’s simply a sign of the bull market, which I’m convinced has years to play out.

Likewise, seeing people offering to buy gold isn’t a sign of a peak. In the peak, prices will be ready to come down, so the buyers will get skittish or even start closing up shop. It’s only because gold is on a tear that so many people are willing to buy – even with a small price drop they can’t lose money at the margins they’re getting.

Most people are still in denial about buying gold as an investment. “Gold is in a bubble.” “Gold is for survivalists who think the world is about to end (and the related ‘you can’t eat gold’).” “The government is just going to confiscate gold.”

Others are negotiating. “I’ll buy it when it dips back down.” People have been saying that since gold was $800. Now it’s $1166. Like anything else, gold won’t go up in a straight line to the peak. There will be corrections. But there are plenty of people on the sidelines ready to buy those dips, including foreign central banks. The central banks have turned from selling gold to accumulating it.

The reason gold will keep going up is that the U.S. government and other major governments continue to print, borrow, and spend money they don’t have. The debasement of currency now and the further debasement that will have to occur to offset national debts are why paper money will decline and gold will rise.