Chennai: Last week, gold saw its roller-coaster ride, which we have been witnessing since the beginning of the year, take it to a new peak of $923.40 a troy ounce. The yellow metal was spurred by a power shortage in South African mines, including some of the world’s biggest. Power shortage affected production for at least two days in succession.
What next for gold? Certainly $1,000 an ounce is not far away and there are valid reasons for gold to top that level. Primary, of course, is the shape of things in the US. The Fed may have come up with an interest rate cut and could be up with another in the next few weeks, but things aren’t as the Fed Chairman, Ben Bernanke, would like us to believe.
According to Antal E. Fekete of Gold Standard University Live, the US is on its way to financial annihilation.
“Confidence in the system is gone, and banks no longer trust other banks. Irredeemable promises can only be redeemed by issuing more irredeemable promises. In such a system, the erosion of confidence cannot be checked. Investors must salvage their capital from the moribund international monetary system and invest in gold,” he says.
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Investing in gold helps transfer one’s capital to safety. The value of gold is more stable than the value of any non-monetary commodity, according to Fekete.
As we have pointed out in these columns before, investors, particularly abroad, would be trying to seek physical gold and try to convert their paper values into gold. This is because the dollar is under pressure, though the US currency is putting up resistance now and then supported by the bond market.
Profit-taking
If the gold market witnessed a fall earlier this month, it could be attributed to profit-taking and even sale by some central banks. But analysts feel once that gets over, gold is headed only one way, up. In fact, the rebound has seen it only seek higher levels as it was witnessed last week.
Gold, according to Fekete, isn’t moving on supply-demand fundamentals and speculators in the market aren’t interest in it either.
Profit-taking could rear its head in the gold market now and then; but it is certain to dry and lead gold to further highs. What will be its peak or when will the bull run is anybody’s guess.
Analysts feel that once profit-taking slows or dies down, gold could witness backwardation wherein spot prices will be higher than futures. That could also end contango or the situation where forward prices of long term futures are higher nearer ones.
Buying strategy
The strategy, therefore, for investors in bullion could be to buy at every dips. Silver, too, is set to keep following gold and a school of analysts even feels that silver could turn out to be a more profitable investment this year than the yellow metal.
On the other hand, worry of recession in the US is all set to keep the base metals choppy. But the problems caused by rains in South Australia, where a couple of coal mines have declared force majeure, should see coal prices rising in the short term.
What next for gold? Certainly $1,000 an ounce is not far away and there are valid reasons for gold to top that level. Primary, of course, is the shape of things in the US. The Fed may have come up with an interest rate cut and could be up with another in the next few weeks, but things aren’t as the Fed Chairman, Ben Bernanke, would like us to believe.
According to Antal E. Fekete of Gold Standard University Live, the US is on its way to financial annihilation.
“Confidence in the system is gone, and banks no longer trust other banks. Irredeemable promises can only be redeemed by issuing more irredeemable promises. In such a system, the erosion of confidence cannot be checked. Investors must salvage their capital from the moribund international monetary system and invest in gold,” he says.
• Quarterly results of corporates: Check out
Investing in gold helps transfer one’s capital to safety. The value of gold is more stable than the value of any non-monetary commodity, according to Fekete.
As we have pointed out in these columns before, investors, particularly abroad, would be trying to seek physical gold and try to convert their paper values into gold. This is because the dollar is under pressure, though the US currency is putting up resistance now and then supported by the bond market.
Profit-taking
If the gold market witnessed a fall earlier this month, it could be attributed to profit-taking and even sale by some central banks. But analysts feel once that gets over, gold is headed only one way, up. In fact, the rebound has seen it only seek higher levels as it was witnessed last week.
Gold, according to Fekete, isn’t moving on supply-demand fundamentals and speculators in the market aren’t interest in it either.
Profit-taking could rear its head in the gold market now and then; but it is certain to dry and lead gold to further highs. What will be its peak or when will the bull run is anybody’s guess.
Analysts feel that once profit-taking slows or dies down, gold could witness backwardation wherein spot prices will be higher than futures. That could also end contango or the situation where forward prices of long term futures are higher nearer ones.
Buying strategy
The strategy, therefore, for investors in bullion could be to buy at every dips. Silver, too, is set to keep following gold and a school of analysts even feels that silver could turn out to be a more profitable investment this year than the yellow metal.
On the other hand, worry of recession in the US is all set to keep the base metals choppy. But the problems caused by rains in South Australia, where a couple of coal mines have declared force majeure, should see coal prices rising in the short term.
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