gold prices

“Whether through exuberant hedgies or anxious private investors, gold just keeps pushing higher…”

SO SPECULATIVE BETTING on gold going higher now equals a record-busting 752-tonne position in Comex futures and options, yet this is not a bubble according to Michael Pento of Deltaga.

Let’s say otherwise. Let’s say that gold prices, surging by almost $100-per-ounce in barely a month, are very much in a bubble…blown up by near-zero interest rates worldwide and a sharply negative cost of borrowing after inflation. Were that the case, the question before potential and existing investors would be simple:

Is this “irrational exuberance” or a “permanently high plateau”?

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Gold is on the rise again, and it is likely that its price action will test soon the previous highest levels, above $1,000. Currently Gold is trading just below this important level.

The price action has posted a high at $999, above the previous significant peak of last June (point E on the chart). This point E was posted on a resistance line that was the previous oblique support of the bullish move occurred between last October and last March. This ascending technical slope was built by higher lows where the price action was regularly bouncing back.

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Whether inflation or deflation strikes, a growing number of people are fast buying gold for defence…

IT’S COMMON KNOWLEDGE that gold bullion proved the most reliable wealth-store during the vicious inflation of the late 1970s. Yet almost un-noticed, gold has once again been the best-performing asset bar none this decade, too.

Gold has dominated the 21st century so far, in fact – something which will look plain to future investors, although only a handful appreciate it today.

Whether gold can now extend or repeat this performance, of course, is less clear. But “People rightly buy gold when they fear inflation ahead,” as William Rees-Mogg, a keen historian of gold, puts it. And just as during the Great Depression of the 1930s, many people now fear inflation, sparked by the very threat of deflation driving government interventions and central-bank money creation.

That’s why global demand for gold jumped throughout 2008, rising 26% on the GFMS consultancy’s data, just as the US, British and Swiss central banks moved to begin quantitative easing – a.k.a. printing money.

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London Gold Market Report
from Adrian Ash
08:30 EST, Mon 30 March

THE PRICE OF GOLD fell hard Monday lunchtime in London, dropping nearly 2% against the US Dollar to hit an 8-session low as world stock markets tumbled and the “risk averse” US Dollar and Japanese Yen both rose on the forex market.

Crude oil fell hard towards $50 per barrel – down 7% from last week’s four-month high – while government bonds rose sharply but stayed on track for their worst Jan. to March performance since 1996.

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