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« Gold Prices Forecasts for 2010 as per The London Bullion Market Association | Main | Doug Casey on the Russian Bear »

Gold Prices Rock Up

Gold Chart  07 May 2010.jpg

Every picture tells a story and for gold bugs the above chart is a pretty nice one.

Gold prices jumped $30.00 bursting through the $1200/oz level as the broader markets hit the wall with the DOW dropping 997 points before recovering to close 347 points down.

Silver prices gained 13 points to trade at $17.63/oz and the gold bugs index, the HUI put on 7 points. It looks as though the stocks have been caught by the surprise as gold prices rocked up and left the stocks waiting at the station, tomorrow may see them playing catch up should gold prices hold at these levels. Oil also dropped around 3%.

The reasons vary for the fall in the DOW from a glitch in the system, programmed selling, etc, however, we tend to lean towards the fear factor emanating out of the financial mess that is now eurozone. Can the Greeks meet the austerity measures being imposed on them? In a word NO! And this situation is spreading like a virus, which in posh circles is now called contagion. One thing that it has brought home to us is that the European administrators are incapable of acting with speed and have dithered with this dilemma. They are now victims of their own inability to act and are no longer in the driving seat, in that they are reactive instead of being proactive and putting some of these problems to bed. The worst of this sovereign debt fiasco is not behind us, it is still to come so hold on to your hard hats and your hard assets.

The break up of the European Union is not far away.

Meanwhile back at the ranch our recently held competition has been won. On the 23rd February 2010 we posed this question: Will gold prices reach $1000/oz or $1200/oz first?

This competition was loosely based on the challenge made by Peter Grandich when we wrote:

We are conducting a poll on where gold will go next, to $1000/oz or to $1200/oz.

As you are probably aware Peter Grandich has recently doubled his bet with this release:

Posted by Peter Grandich at 8:25 PM on Sunday, February 21st, 2010
Hello Perma Bears!!!  I’m doubling my wager to $100,000 and its good for the next 72 hours.
I hope they can learn of my offer before they head for the hills.
Go Gold!

Well, our readership voted 75% in favour of gold prices reaching $1200/oz first and so they are the victors, which is pleasing to us as it shows that our readership is well and truly switched on to just what is going on, well done to you, the team.

Stay on your toes as things are really warming up and opportunities will arrive thick and fast so we must be wide awake and ready to move once they have been identified.

As for today, well have a truly sparkling time.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

Over on our sister site, we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.

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Reader Comments (4)

Apologies, we forgot to add that gold prices are rising in unison with the US Dollar, we may have reached the point where gold decouples from the US Dollar and goes its own way.

May 6, 2010 | Unregistered CommenterGold Prices

yep, nice double-top gift for all those who didn't short gold yet or were afraid of. silver,oil bonds and stocks has showed us already that the new deflationary wave has began. gold is now on very shake ground and can collapse anytime only to teach new folks that "safe" stuff doesn't exist on the market place, or even more deeper than that "safety doesn't exist in nature".
keep up the good work with your posts, very useful and a big variety

May 7, 2010 | Unregistered CommenterDi

Here's what I find most interesting. It was taken as axiomatic that if the Euro tanked / the clownbuck rose that gold would trade with the Euro and get sold.

If I'm not mistaken, that was Di's thesis...a rising dollar would hurt gold. Not unreasonable, given recent history and the tight correlation witnessed between the Euro and gold for a long time, but still a shallow analysis.

To get all technical on ya, we're in the early stages of paper currencies going poof. Should be quite a show. Gold is being re-established as money...not as a medium of exchange, but certainly as a store of value, and it's now rapidly becoming the money of choice in a system being "held up by toothpicks." People are trading Euros AND DOLLARS for gold at the same time.

"Safe" is a relative concept when it comes to investing. The question is what is the saf-er choice or the saf-est choice. Tell the poor chump whose currency has just been devalued that gold isn't safer than paper promises.

May 7, 2010 | Unregistered Commenterfallingman

One question out there is does the IMF own any gold?
I would ask, Who owns the IMF?
Might be a great story for you guys.
Thanks for your articles.
Chuck P.

May 7, 2010 | Unregistered CommenterChuck Pinnell

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