Let’s get something clear rich up front: We are not gold bugs. Like most smart, reasonable people, we don’t jump on bandwagons based on wishful thinking or a habit of seeing only doom and gloom. Traditionally, the warning to “Buy Gold!” has been the longtime mantra of the chronically pessimistic crowd is starting to buy gold, too. And for very good reasons.
As other asset values decline, people will want to put their money somewhere. They will want to buy something, preferably something of rising value that has a long tradition of acceptance and demandduring difficult times. That is Gold. As demand continues to rise for gold, and then rapidly riseswhen the other bubbles pop (i.e. the Dollar Bubble & Goverment Debt Bubble), the price of gold will shoot up. The rising gold is your very best bet for porfits during the downward spiraling world economy.
Like we already said, we are not gold bugs. In fact, gold just might be the silliest of all investments. Think about it. People Spend tons of capital, time and effort to haul a bunch of rock out of the ground at enormous expense and smelt out tiny bits of gold from the rock, melt them together, and then do absolutely nothing with it – just put it in a vault. How much sillier can you get? But in coming years, silly gold will be a truly smart, truly spectacular investment.
Just see what is currently happening is the gold and silver markets, and the Dollar bubble has just only started to pop.
Gold Price Hits New Record at $1,380 on US dollar Weakness
Gold prices hit new record highs on Thursday, fuelled by dollar weakness as hopes of more monetary easing by the US Federal Reserve continued to run high, aided by Singapore’s move to let its currency appreciate.
Silver rose to a fresh 30-year top at $24.38 an ounce, and palladium hit $603, its highest in more than nine years, as the sinking dollar unleashed a broad rally in commodities.
The dollar marked a 10-month low against a basket of currencies, coming under broad selling pressure after Singapore widened the trading band of the Singapore dollar, letting its currency hit a new record high.
“It’s the old story – the talk on the US stimulus package, and too much hot money around. What should you do? There is practically no interest rate, so everyone is rushing into commodities and the stock market,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers Ltd in Hong Kong.
“Until the interest rates turn around, we won’t see a sharp drop in prices. For the short term, gold is still bullish. We’ll reach $1,400 sooner than we expected.” Spot gold rose to an all-time high around $1,380 an ounce and was at $1,379.90 by 0036 GMT, up $9 from New York’s notional close.
US gold futures for December delivery also hit a new record high around $1,381 an ounce.
Buying interest in gold rebounded from a dip at the end of last week. The Relative Strength Index, or RSI, rose to a one-week high of 80.9, suggesting an overbought market.
But holdings in the SPDR Gold Trust slipped more than two tonnes to 1,285.200 tonnes by October 13, their lowest in more than two months.
Holdings in the iShares Silver Trust rose to a new record high of 10,125.17 tonnes. Gold is expected to rally towards $1,404 per ounce as it has climbed above a consolidation range between $1,324.85 and $1,364, said Wang Tao, a Reuters market analyst.
The physical market is seen holding off on action after the rapid ascent of prices.
“Prices have risen too fast today. Selling is not aggressive, as people bet on further price rise. Buying is more cautious at this level,” said Leung of Lee Cheong.
In China, record high prices may curb demand for jewellery, but investment needs are seen rising with prices, traders said.
Spot platinum was the only metal in the complex to shy away from record levels, up 0.63 per cent to $1,713 an ounce.