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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold prices rise but be cautious

Commodities / Gold and Silver 2010 Oct 06, 2010 - 11:21 AM GMT

By: Miles_Banner


Gold prices hit new all time highs again this week and the last. They are trading around $1340 an ounce. Silver prices are also trading at very high prices, closing in on $23 an ounce.

The recent rise merely indicates what we’ve been saying for a while, that currencies are in trouble. Last week saw Ireland move into the spotlight. It’s government will take steps to prop up it’s ailing banking sector. This could result in costing the Irish government close to Euro 50 billion – two thirds more than its national income in 2009.

The currency warfare errupting on the world stage is heating up. The bank of Japan is the latest to reinforce the zero interest rates philosophy, and state its intention to generate more Yen to buy government bonds. It’s a war to lose value, to boost manufacturing and GDP. It’s a war that looks like only owners of gold can win.

Of course we need to raise a note of caution. The dollar index looks oversold at the moment, and, despite our inclination to think the dollar is doomed, we must exercise some market rationality. The dollar has been under stress before and each time it has rebuffed the doubters. It still has some way to go before it retests the lows of 2008 but I wouldn’t be surprised if we see some sort of rally as it puts up a fight.

With gold having a nice run of late the commentators are back in full swing, talking it up to the delight of the market. We’re watching for signs of illusion. It’s just like the market to drop the shoulder and move the other way.

Our bullishness is beginning to be tested now we’re at these levels. Some are now calling $1500 an ounce by Christmas.

As we mentioned in our email last week, we think at that level there will be an awful lot of profit taking.

Yes the talk of recovery is beginning to be throttled. The markets don’t believe it. There’s still too much to sort out. Too much debt to clear. Austerity doesn’t bode well for economies. Those in charge want to keep you spending, whilst they tuck their money under the carpet.

Junior gold miners offer glimpses of hope

Junior gold miner’s have been benefitting most from the run up in the gold price. Traditionally gold miner’s have used the leveraging effect of the price of gold. Whilst many of their operation costs remain the same the profits they receive from gold sales increases.

In the past few weeks we’ve seen positive movements from GGG resources, Kefi Minerals, Orosur Mining and more. These movements suggest the next phase of gold’s bull run could be played out in the miners. So stay tuned.

It’s a rough run to the top and by the time the top is in most would have missed it. This bull still has legs but it’s due some sort of correction.

So keep watching the gold price, and we’ll see you next week.

Gold Price Today

We leave you this week with a fascinating article forwarded to us by one of our readers, James. It’s a Bloomberg story that reveals the insatiable appetite for gold amongst central banks – Central Bank Gold Holdings Expand at Fastest Pace Since 1964

© 2010 Copyright Gold Price Today - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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