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The gold bugs are on the loose. Today gold shot up to another new high of $1,212 per ounce. So far this year gold has risen 34%.
Investors are looking for a safe haven and are running headlong into gold. Governments around the world are buying more gold, with India buying 200 metric tons from the International Monetary Fund. The US Mint has run out of gold coins. The situation in Dubai is up in the air.
Technically, the market is in strong hands. When a market breaks out to new record highs, some traders take profits. However, there is little short selling because the sky is the limit on the upside. We also have some gold producers that used the futures markets to hedge their physical gold. Hedgers traditionally sell futures contracts against their physical holdings. Right now they are taking a big hit. Some producers have decided to cover their short positions. This further adds to price appreciation.
The other key factor is the weak dollar. Investors are selling dollars to buy hard assets such as gold and other commodities. The weak dollar is creating uncertainty in world markets. Investors are looking at the huge US debt and are running away from dollars.
Do you believe that gold prices will keep going higher?
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Reader Comments (Page 1 of 1)
12-02-2009 @ 5:14PM
eldorado said...
wow i guess now that the gold went up i hope that chash for gold and all those gold buying deal pay more well anyways want to work from home try this training sit 7 day free trial http://www.thedreamcometrue.ws
12-02-2009 @ 6:17PM
Peter Van Schaik said...
Wow, it's hard to believe it was only yesterday that I wrote on BloggingStocks "So now everyone knows the sky is the limit when it comes to the price of gold." I was, as is so typical, being a bit tongue in cheek, but now the professional paid pundits are declaring the same sentiment. The contrarian in me has to wonder, "Are we close to the time to sell gold?" Keep a couple things in mind: It doesn't have to be a real, over heated, speculative bubble in order to burst and when the trend is obvious to all, it's over. Buy gold with caution: Gold isn't a great hedge against deflation. http://jpetervanschaik.googlepages.com
12-02-2009 @ 9:37PM
dang1067 said...
SCARY, just imagine the head of main Central Banks suddenly snaps its finger to order gold market to collapse at $400 oz... Just imagine the faces of all those who paid above $1,000 oz.... LOL!!!