Can Gold Reach New Heights This Year?

August 4, 2010 | By | Reply More

Gold IngotHere we are just entering the peak of the holiday season when traders leave their desks and start partying with their profits. Make no mistake the professionals have had a great year as stock markets have thrown off the woes of 2008 and shifted back into top bull gear.

The cynics amongst us that are committed to the “lies and mirrors “ of governments and Wall Street who have engineered this market despite rising unemployment, rising bankruptcies, excessive cost cutting to make the recent rounds of companies profit reports look good and which may be hard to repeat, banks still not lending and a growing list of US states in financial crisis.

Then there is the prospect of those lucky enough to be in work plus the diminishing band of the profitable self employed facing escalating and potentially crushing taxes makes us ask ourselves very seriously whether gold is a buy now.

Before trying to shed some light on the question we should express our profound relief that at least the trading and banking community should be able to contribute handsomely to the rising tax demands to come, that is of course if they don’t find the loopholes that they have always seemed able to exploit in the past.

Actually whichever we look at it, things look far from promising and we anticipate that the day of reckoning for western economies and their stock markets is drawing ever closer.

At the same time the Dollar, the Euro and the Pound are becoming progressively devalued and with China sitting in the driving seat there is a growing chance that their not unreasonable self-interest will sooner or later revolutionize the currency market at the expense of our paper money.

Gold in the meantime has, to all intents and purposes, traded side ways for the last month or so and well off its peak and we believe that unless some unexpected crisis occurs this will continue to the end of the month.

As traders return and realism about the economic prospects overcomes the lies and procrastinations of our political masters and their acolytes then we fully expect gold to reach new heights, most probably by the end of the year to be knocking on the door of $1300 an oz., quite possibly even considerably higher.

This means that the next four weeks could see some buying opportunities if lack of volume and a little manipulation leads to prices around the $1170 an oz. mark.
Otherwise a sustained break out above $1200 an oz. should also signal a buy.

We bought SPDR Gold Trust (GLD) December $116 calls at $5.80 on Monday when the stock was trading at 115.66 and intend to repeat the move should GLD fall away to circa $110 before the end of August.

Despite the occasional pundit warning of the potential danger of this and other funds holding the physical metal we believe that it is extremely unlikely that problems will arise and that it is more likely to be an attempt at attention grabbing by the writers than a fair and unbiased appraisal of the situation.

Be that as it may, if you prefer to actually buy and hold your own physical gold bullion we can thoroughly recommend dealing with BullionVault where your purchases can be held in either New York, London or, more importantly, if you are a worrier in Zurich, Switzerland. They hold over $19 million dollars worth of gold bullion on behalf of their clients who can deal in as little as ounce at a time.

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Category: Gold

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