Everything You Need to Know About Gold Prices

Gold's hot. Then it's not. Now what? Where did the love for the shiny metal go? Now the gold bugs are crying, and the "I told you so crowd" is warming up in the wings. After a stunning rally to $1,895/oz., gold prices are down hard, falling below $1,600/oz. That's a 16.11% drop that has the gold bears drooling for more-but probably not for long. Let's start with gold prices themselves. Right now they're down three months in a row and many gold investors fear there's no bottom in sight. What they don't realize is that the fall in gold prices is as rare as proverbial hen's teeth. This is the first time we've seen gold prices tumble three months in a row since March of 2001. In fact, since 1957 we've only seen gold prices fall three months in a row 65 times out of a total of 661 three-month periods, according to data compiled by Bloomberg and Standard and Poor's. But here's the thing about gold prices... Gold could fall all the way through May, turning what it already a rare occurrence into an ultra-rare occurrence. Would that be a bad thing? In the bigger scheme of things, not really. People forget that gold prices fell by more than half from 1975 to 1976, and were down 17 out of 24 months. At the same time, gold prices also recorded 10 three-month declines during the period. That was, incidentally, right before gold rose 721.25% to $850.00/oz.-- a peak gold hit on January 21, 1980. The point is, bear tracks always precede bull market runs. So I am not especially concerned by this pullback in gold. In fact, as you can see from an earlier forecast, we're right on target with my expectations for gold this year. Take a look at what I shared with my readers on January 2, 2012: The drop in prices we're seeing is simply a matter of traders adjusting their risk tolerance by taking money off the table. They are moving out of gold and into dollars.