The last time gold prices were this cheap, Donald Trump was a presidential candidate.
Those were the carefree days of July 2011. Today, history repeated itself…and I’m not talking about the Trump part.
Gold fell below $1,500 an ounce for the first time 21 months today. The yellow metal dropped a staggering 66 points today, extending a six-month decline that has taken the price of gold from just under $1,800 an ounce to $1,487 an ounce as of this moment. That’s a 16% drop-off.
The reason for the decline is pretty clear. Stocks have been on a tear, vaulting 17.5% since November 15. Rising stocks means an absence of investor fear. And when investors aren’t afraid, they have no need to seek shelter in a safe haven like gold.
Gold’s decline has been so pronounced that analysts are now speculating that the metal’s 12-year bull run may be over. Technically, gold has already entered a bear market – which is defined as a 20% drop. Gold prices have fallen 21% since reaching a record $1,888.70 an ounce in August 2011.
Look at that date one more time, though: August 2011. Just a month after the price of gold last dipped below $1,500 an ounce. If you’re a gold investor, that’s all the reason you need not to panic.
Most people think a market correction is coming. In fact, it may have already begun today, with the S&P 500 falling 0.3%. There are simply too many headwinds – Cyprus, a disappointing jobs report, slowing retail sales – for stocks to remain near all-time highs.
As stocks fall and investor fear returns, another flock to gold is likely. Even if the Fed keeps pumping $85 billion a month into the economy. That tactic can only get you so far. Eventually, the economy has to prove it can stabilize on its own before investors can feel comfortable. With 7.6% unemployment, that hasn’t happened yet.
Until it does, gold remains an attractive play – especially at these depressed levels. If the turnaround is even a fraction as quick as it was the last time gold dipped below $1,500 an ounce, you might want to load up on exposure to the yellow metal now.