What Does It Mean To Be “Bullish On Gold?”

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Recently, Michael Haynes, CEO of APMEX, appeared for an interview on The Hays Advantage from Bloomberg Radio.  Kathleen Hays, the show’s host, mentioned the fact that the price of Gold had increased to over $1,600 per ounce. She stated that she reviewed presentation Michael’s recent presentation titled “Asset Alchemy in the Uncertain and Volatile 21st Century.” Listen to the entire interview here. Kathleen got the conversation rolling by asking a pointed question:

KATHLEEN HAYS: “Michael, you’re bullish on Gold. Why?”

MICHAEL HAYNES: “Well, actually, it’s not a question of being bullish on Gold. It’s a question of being bullish on asset allocation that would include Gold.”

“Bullish” is a word that often arises in discussions related to investing, but what does it actually mean?  The term “bullish” relates to a type of financial market trend known as a “bull market.”  In a bull market, investors feel confident that the market is rising. They believe the share prices will increase for the foreseeable future. This is in contrast to a “bear” market, which is characterized by a decline in both market prices and investor confidence over a sustained period of time. 

The confidence a bull market inspires tends to lead investors to… well, invest in the hopes of benefiting from potential future price increases.  Bull markets generally exist for a country at a time when economic growth is high and unemployment is low.  Therefore, to be “bullish” about something in the financial world is to be optimistic about it, and to believe that investing in it is a sound decision that will have a positive outcome.

With that in mind, why is Michael Haynes bullish on including Gold as part of asset allocation?  What makes him confident that buying Gold as part of an investment strategy is a smart choice? He explained later in the interview:

MICHAEL HAYNES: “Of course no one can predict the future.  No one knows if cash is better, stocks are better or bonds are better; there’s seemingly a need now for a fourth asset class.  Historically that asset class has included gold, oil and real estate; all of which have different elements to them.  But Gold seems to be the asset that has been performing both in – historically – inflationary periods as well as in periods of economic stress and uncertainty, much as we’ve had for the decade of the 2000s.”

So there you have it.  Michael is bullish on Gold as an asset because the market for Gold has been and will likely continue to be a bull market.

By Craig C. Calvin, APMEX Account Manager

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