A Warning on Gold…

 

This week’s chart is both a “we told you so” piece and a “warning” piece. It displays the incredible strength in gold over the past year… and the new all-time high the metal reached this week.

Even before we published this 2005 letter to our brilliant friend Bill Bonner, your DailyWealth editors were gold bulls. The reason for our #-ad_banner-#bullishness was simple: We knew that after decades of ignoring the metal, the world would wake up to the coming decline of U.S. and European paper currencies… and flock to the “anti-paper currency,” gold. We’ve been so bullish on gold over the years, we even published a book on it. (DailyWealth Premium members can sign in and find The Gold Investor’s Bible on our Reports page here.)

This week, gold confirmed our thesis again by breaking out to new highs around $1,625 per ounce. Every absurd statement coming out of Washington D.C. helps drive it higher and higher. But to the folks buying gold right now: Be ready for a dip.

Gold is one of the most volatile assets in the market… and it’s had a heck of a run over the past four months. It’s now overbought by almost every short-term indicator you can find. It could also get smacked lower if Congress passes a fix to the debt ceiling “crisis.” In short, we’re long-term bulls on gold, but expect a dip soon…