Precious metals have been weak for the year of 2012 and investor sentiment is nearing an all time bottom, but I believe we haven't reached bubble territory yet.
And surprisingly, there is a correlation (Charts 1 and 2)! If you look very carefully, you will see that the price of gold goes up when central banks buy gold. For example from 1970 till 1976 we see a net positive buying of gold by central banks. That period was also bullish for the gold price. The same can be said for 1980. Then came a period where central banks slowly got rid of their gold from 1980 till 2002 and that's a period where gold declined in price. And from 2003 onwards, central banks have slowly shifted from net sellers to net buyers again today.
Keep reading about this analysis here.
Keep reading about this analysis here.
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