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Tuesday
Oct062009
Gold at All Time High
As we can see from Kitco's chart of gold prices, gold has blown right through its previous high of $1033/oz and is currently trading at $1041.50 as we write. This is great news for holders of gold and its associated mining stocks as gold has flirted with the $1000/oz level for some time now and many investors were becoming frustrated at golds inability to hit new highs.
The twenty dollar rise in todays session has certainly thrust gold prices back under the media spotlight and has also brought some relief to precious metals bugs across the globe.
As we have repeatedly told our subscribers gold prices are primarily an inverse reaction to the movements of the US Dollar at this point in time. The chart of the dollar below depicts its demise over the last few days.
Another nail in the dollars coffin came in the form of a report by Robert Fisk of the UK newspaper The Independent, entitled; The demise of the dollar, which includes this rather devastating snippet:
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.
The dollars status as the worlds reserve currency is now shaky at best with the ramifications of quantitative easing, bailouts and the booming money supply slowly being understood by the investment community. Holding dollars is not the safe haven it once was, hence the flight to real money, gold, has just begun.
We expect gold prices to consolidate above the $1033/oz over the next few days and by New Years Eve we expect gold to be trading at around $1250/oz so there is no time to waste. Buy a few of your favourite quality producers and hang on as the short term will be an explosive white knuckle ride.
Have a sparkling day.
Your thoughts are of course most welcome.
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Reader Comments (9)
More than just a breakout above the all time high, it's a breakout above the neckline of a textbook perfect inverse head and shoulders pattern. It's a massive formation nearly two years deep - the bigger the pattern, the longer and stronger the move.
Still, reading tea leafs alone isn't always a good call. Fundamentals tell the true story. Anyone who looked at a stock company with a balance sheet even close to the train wreck that is the US financial system, would run screaming for the hills. It's not bad, it's worse than most folks can even begin to imagine.
Gold is the only thing I've ever owned that didn't make me happy to see the price go up. It may ease the pain of USD devaluation as everything else turns to dust, but these are going to be hard times for everyone no matter how well hedged.
this is it, this the right time to short. thank you
Bob,
I just wanted to add my two bits to the discussion on why China has freed up the gold and silver market to its citizens.
I believe that China is waiting for its citizens to amass, what it believes, will be "critical mass" in precious metals.Once this critical mass is reached, it will be sufficient to support a gold and silver backed yuan. At that time, several years from now, China will do an FDR and confiscate its citizens' gold and silver, and launch a reserve currency (yuan) that is backed by these metals.
This will fulfill China's ultimate goal of world domination through a strong economy and a strong currency. I just wonder if anyone can step in and stop that train.
How the hell can Gold be at an ALL time high when its not yet over US$2300? It would have to get over this amt to allow for infation from the previous 1980 high & thats using highly suspect "official" inflation data. I find it intellectually dishonest (& a real pity) that you & other commentators don't point this out. Why not?
Cliff Anderson
Perth Australia
Di, You have been predicting $500/oz for some time now, are you now shorting gold?
Cliff, We thought that the inflation factor was a given as its all the web and did not feel need to mention it again, but your point is taken.
T,
Yes, the China influence with their general public getting involved will also provide a floor under gold prices along with their currency.
Don,
Gold going up is only good for gold bugs as it signals torrid times for most of us, so be careful what you wish for.
If you a five minutes this is a clip of Max Keiser giving his 'take' on a new reserve currency:
http://www.youtube.com/watch?v=QcTLSl-oKbo