Bull market in full flight with gold enthusiasm

Bull market in full flight with gold enthusiasm

The gold price was down over US$150/oz at one point on Friday, but it had regained 50% of that loss before the close of trading. Nervous nellies might think that signalled the top, but it was actually healthy.

I worry when prices just go vertical because it makes a savage correction more probable. A healthy market is one of pushing and pulling, action and reaction. There is nothing wrong with the gold price doing some work in the range of US$4,000 to US$4,400 oz.

In contrast to the sensible movement of gold stocks, rare earth share prices on the other hand have been in gaga land. The share price rises have been ridiculous and they are unsustainable. If they have gone up because of the spat between Trump and China, and speculators believe rare earth prices will rise higher, any resolution of the issue will lead to lower prices. If China relaxes its constraints and releases more product to the international market the heat will come out of the market quickly and share prices will fall.