GOLD’S BULL MARKET ISN’T OVER 147ever going to its final destination without a 50 percent retrace-
ment, meaning even if you believe that gold could end up at
$7,000 an ounce, which I do, if you see it at $1,900, a 50 per-
cent retracement would take it down to $950.
In other words, it would go all the way down to $950 and
then it would bounce back. So what Jim said, he said, “I have
a lot of gold. I’m not selling it. I’m sitting on it. I’m a buyer at
$1,000, but I’m not necessarily a buyer at $1,100 because I
kind of look for that 50 percent retracement.”
That said, if you go back over a four-year period, gold has
been much higher. In August 2011, it was about $1,900 an ounce.
It’s made its way down to around $1,100 an ounce on four sepa-
rate occasions, and each time, it rallied back. Now, it’s never got
back to the $1,900 level, but it has gone up to the $1,350 range.
That tells me is that there’s a physical demand out there.
Forget about gold futures and paper gold. There’s physical de-
mand. When gold gets up to those levels, people do line up.
They don’t line up to get their money out of the bank; they line
up to buy physical gold.
You see this in Asia — in Hong Kong, Thailand, Malaysia and
in mainland China. You see it even in Australia and other places
around the world. I’ve been to many of those places and spoken to
people there, and this is something they tell me about all the time.
This what’s called a “recursive function.” The plain English
name for that is the feedback loop where something happens;
A happens and that causes B to happen, but B gives you more
A, and A gives more B, and B gives you more A, and A gives
you more B, and it goes around and around and the behavior
keeps amplifying based on that feedback loop.
■ Gold is Money (Once Again)
One of my favorite quotes on the topic of gold is attributed
to Lord Nathan Rothschild, a legendary nineteenth century