Doug Casey on Gold's New High, the Fed, and the Greater Depression

Casey Research
Nov. 12, 2010

L: Good evening Doug. The Fed's new $600 billion liquidity injection pushed gold to new records, at least in current dollars, topping our $1400 target for this year. Our gold stocks are up even more. Even the World Bank is suggesting that a return to some sort of gold standard might be worth considering. Does the market feel "toppy" to you? What do you make of the latest numbers?

Doug: Well, first, it's fascinating that the head of the World Bank is actually talking about gold. That signifies a huge sea change. Especially in that the IMF has been a huge seller of gold, and the world's central bankers have the lowest percentage of their assets – ever – in gold.

I've long said, bull markets have three phases. This is classic market theory, nothing unique to me. There's the Stealth Phase, when prices are extremely cheap and everyone hates the investment – or if they don't hate it, they've forgotten about it. That's long gone for gold, this time. There's the Wall of Worry Phase, when people know it exists, and it seems likely to go higher, but people deny it, or find all sorts of reasons to believe that every correction along the way up means the market has peaked. I think we're in the late stages of this market phase, and heading into a real Mania for gold – manias being the third phase of classic bull markets.

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