If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around?
The trouble with being a contrarian is that you can never be quite contrarian enough.
“Gold is rising because the post-Breton Woods exchange rate system doesn’t work,” Eric Roseman, our colleague over at the Commodity Trend Alert, matter-of-factly declares. “More than ever, governments are piling up debts, as a result of bailing-out their respective banking systems. There is a price to pay for this profligate spending. And gold sniffs trouble.”
This week, the big story was once again coming from the gold market. Mid-week, the yellow metal hit $1020 – but the rally was not of the usual variety. Generally, investors flock to gold when the dollar is weak and inflationary fears run high. But as we all know, inflation is not a problem right now – despite the Fed’s best efforts.
Gold took off yesterday…closing at $1020. Here at The Daily Reckoning, we’re impressed. But we’re not that impressed. Gold, of course, is half of our Trade of the Decade, which we announced almost 10 years ago. We’re bullish on the metal…have been for a very long time. But recent comments in this space have made readers wonder what the Hell is going on…so we will spend a few minutes clarifying.
Gold climbed on Tuesday after data showed the U.S. manufacturing sector grew more than expected in August, lifting appetite for assets seen as higher risk, such as commodities, and boosting inflation fears.
“If gold is ‘past its day’, what of toxic derivatives and today’s deluge of US Treasury bonds…?” Just like poor Pip Dickens’ Great Expectations, central banks keep inheriting unwelcome bequests.
Gold and silver prices climbed to their highest in seven weeks on Monday, as the dollar’s slide to its lowest since mid-December boosted interest in hard assets.
Gold traded sideways through Hong Kong then shot north at the London open and remained range-bound between $951 and $953 for the rest of the day, finishing at $951.60/oz., up $3.60. For the week, gold is up 1.5%.
Gold didn’t do much through Hong Kong and London then showed some volatility in Comex trading, reaching an intraday high above $957 around 1 p.m. in New York and tumbling down from there through the Globex, finishing at its intraday low of $948.00/oz., down $3.10. Overnight, gold is little changed.