Gold price about to stage a huge rally
Posted on 21 April 2009 with no comments from readers
The gold price is poised to break through $1,000 an ounce this week and could reach $1,500 before a price consolidation. Yesterday gold and silver closed higher while global stock markets fell as the five-week rally ended.
This is an important trend reversal and marks a shift by investors to safe haven assets in advance of another plunge in equity values.
The US dollar also strengthened across the board and bond prices rose. It is unusual to see both gold and the dollar rising together but again this normally signals an important trend reversal.
Money supply growth
The fundamental case for investment in precious metals has also become overpowering. Global bank bailout and stimulus packages have resulted in a huge increase in global money supply that has never had any effect except inflation in all history.
The gold supply by contrast is relatively fixed and production is actually falling. Supply is even tighter for silver – where stock levels are a hundredth of gold – and that is reason enough to expect the established pattern of silver outperforming gold will be repeated again.
As investors rotate their assets out of stocks and into alternative asset classes the best returns are therefore likely in precious metals, and such information tends to be self-fulfilling.
There are all sorts of minor trends supporting this basic trend, and like any true bull market there will be a compounding of supporting evidence: from a shortage of gold available for bank leasing to UK Prime Minister Gordon Brown’s call for IMF sales, often seen as a contrary indicator as his previous calls boosted gold prices.
Trend is your friend
However, in all investment markets it is the trend that is really your friend. The next dilemma will be how to best leverage the upside to the gold price.
This will start with a debate about silver as a better alternative. But then gold and silver stocks will come under the microscope, and the value of the bombed-out junior stocks brought into focus.
It can be little consolation that great days lie ahead for gold for this signals the failure of the conventional investment universe, and that means further horrors ahead for currencies, stocks, bonds and real estate.
no Comments posted by readers:
My question is :
And how often have you been wrong with the price of gold over the last few years ?
Eventuelly it will get there but why now ?
Dropping another $ 5 today and the gold stocks doing a pits. Going by charts it looks pityful.
My recommendations on gold are detailed in ‘Opportunity Dubai’ in the chapter on investment picks. They started three years ago with gold at $455. Please refer to the section on Gold & Silver Investment on the website navigation for more on the situation today. Buy-and-hold is my advice, trading is for the professionals and best avoided, even they get it badly wrong. And using margin with gold is a speedy way to lose a fortune.
JUST SITTING ON MY GOLD COINS , FOR HOWEVER LONG IT TAKES …NOT ANXIOUES TO TRADE FOR FIAT !….NOT EVEN AT 1500.00
There are few things in life, of which we can be “certain.”
But any serious student of history knows that, when a government engages in massive printing of their fiat currency, the consequences for that country are always disastrous. History, therefore, is a very good teacher.
Worse yet, is when all countries around the world are running their “money printing” presses at full speed. This has never happened in the history of the world.
So I am certain of two things:
1. The “worth” of fiat currencies in the world will decrease, slowly at first, then more rapidly in a few years.
2. Gold, which can’t be manipulated by governments (although the USA government is trying to suppress it with “paper gold”) is money, when nothing else is.
Since gold is the ultimate “insurance policy” against fiat money, then in the final analysis, it doesn’t matter what happens to the near-term price of gold.