Is Gold Still Relevant?

www.armstrongeconomics.com

QUESTION:

Mr. Armstrong, Gold rallies with each political event and then falls back when the event is over. It is not in a sustainable relentless bull market as was the case in the 70s. Almost every stock market has outperformed gold since 1980. This has made me wonder if something is different. Here in India the younger generation do not buy gold and simply no longer look at it as a safe haven as the older generations. When I travel to the USA, I notice the younger generation pay with their cell phones and are not even interested in paper money. In Europe, the younger generation is also disinterested in gold. Could it be that gold is becoming obsolete as the horse and buggy?

POM

ANSWER: 

Yes, gold is still relevant for the older generation. It should rally right now and the month-end closing was very bullish into September, but not yet a breakout. To be impressive, gold must exceed the 2016 high of 1377.50 intraday. To show real strength into early 2018, we must close above 1393. A closing above the 2016 high would reflect a rally into 2018, but warn that we are more likely going to fall back once again. The rally in gold simply because of the dollar is not sustainable long-term.

Nevertheless, indeed, over the course of generations, the ideas and trends of one generation are eventually replaced with new trends. Just look at art. The paintings of women by Rubens were always robust. If you were thin you were considered poor. In Asia, girls try to whiten their skin because darker skin implies you are poor and work in the fields whereas in the States girls want to have a tan. Trends changes as do fashions over time. Investments are the same. The big investment up until 1907 was railroads and industrial stocks were considered risky ventures until the automobile change that perception.

The older generations are much more focused on gold and privacy issues than the younger generation. When I talk to someone in their twenties, having to travel and subjecting yourself to searches is normal. This is how it is to them. They do not understand Snowden.