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Here's why I'm bullish on gold

The September jobs report, which was released in early October, was so universally dismal that it managed to convince the majority of investors the Federal Reserve would not raise interest rates in 2015.

Since it is widely believed that gold rallies when interest rates stay below the rate of inflation, it is not surprising that in the two weeks following the release of the report, gold rallied from a multi-year low of $1,113 on Sept. 30 to $1,184 on Oct. 14, a gain of 6.4 percent. But the sentiment didn't last. A number of pro-rate hike statements from Fed officials, a supposedly hawkish statement from the Fed's October meeting, and a better-than-expected October jobs report released in early November, convinced the vast majority of investors and economists that a December rate hike was firmly back in play. This sent gold right back down, hitting a multi-year low of $1,075, a decline of over 9 percent in just two weeks.

The tragic terrorist attack on Paris spurred a rush of gold buying on Monday morning, showing that investors still quickly turn to gold during times of uncertainty. Yet this wasn't enough to push the price back over $1,200, and the market remains pessimistic about gold's prospects. Many are now saying that a 25 basis-point hike in December would be the final nail in gold's coffin, sending the metal down to who knows where.

However, there is very little reason to believe that gold will fall much further than where it is now, even if the Fed does hike rates in December. There is a powerful case to be made that the last couple of months may have formed a double bottom in gold that provides a very good entry point for long-term investors.

The Fed either raises rates by 25 basis points in December, or it doesn't. Both scenarios are actually bullish for...


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