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FLASHBACK: Gold Bulls' 'Fear of Hyperinflation Badly Misplaced'
From the September 2011 Elliott Wave Financial Forecast

By Editorial Staff
Wed, 17 Apr 2013 14:30:00 ET
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Editor's note: Silver is down 56% since its peak on April 25, 2011, while gold is down 31% from its top on Sept. 6, 2011. Both metals are moving in line with EWI's forecast from the September 2011 issue of The Elliott Wave Financial Forecast, which published within two weeks of gold’s peak at $1921 an ounce. Here's an excerpt from that issue.

The “fear” of hyper-inflation, which permeates bullish gold forecasts, will, in our opinion, ultimately prove to be badly misplaced. The evidence of a bullish extreme from which gold is now reversing includes a Daily Sentiment Index reading of 98% bulls (trade-futures.com); a surge in SPDR Gold Exchange-Traded Fund total assets, which, incredibly, pushed its value past that of the SPDR S&P 500 ETF; and a round of margin hikes on gold futures contracts by the Chicago Mercantile Exchange. The CME responded to intense speculation surrounding gold’s price rise with two rounds of hikes that raised margin requirements 49%. Readers will recall that a similar series of margin increases in silver—an 84% rise from April 26 to May 5 (2011)—coincided with the end of the line for the junior metal’s surge. At the time, EWFF noted that a similar series of margin boosts in 1980 accompanied silver’s all-time price high. Margin hikes are not necessarily fatal to a rising trend, but when they come in bunches, as they have in gold and silver in recent weeks, they tend to congregate around major price peaks.