Bullish News For Gold Continues To Mount

March 13, 2009 | By | Reply More

The bullish news for gold continues to mount up while hesitancy prevails in the market.

In Asia overnight the spot price again came under pressure dropping to near $920 an ounce down from $930 in New York late trading on Thursday.

As we write the price in Europe has staged a recovery to $925, no doubt due to the announcement by the Swiss National Bank of its intention to depress the value of the franc by selling it off to avoid domestic inflation.

Apparently the thinking is that buying foreign bonds and currencies will do the trick. We wonder what countries bonds and currencies are on the buy list for the Swiss franc which, until today anyhow, was considered to be one of the worlds most stable and conservatively managed currencies?

What hidden nasties are about to emerge from the murk of the secretive Swiss banking community? Surely it must be more than the likelihood that they will soon succumb to pressure and give up the identities of the tax evaders they have been sheltering.

On this note perhaps UBS, the troubled Swiss banking giant, might know a lot more than it is prepared to admit when it forecasts gold to reach $2500 an ounce within a few years.

The latest forecasts are that global gold mining production will continue to fall. That in parts of the world, delays of up to two weeks are taking place in the delivery of gold and silver bullion bars and supplies of American Eagles are questionable.

SPDR Gold Trust (GLD) the worlds biggest ETF now holds gold bullion to the tune of a record 1041.53 tonnes as of yesterday. No lack of confidence evidenced by this management as its’ holdings have now overtaken Switzerland.

Gold and other precious metal miners did well in New York yesterday as the major indexes continued to rally, indicating that not all of gold’s recent drop was due to some renewal in confidence in stocks and shares as funds were removed by bargain hunters from the safe haven asset.

As the weekend looms it is anybodies guess how the markets in gold and silver will close tonight although profit takers will likely rule the roost in stocks and shares.

We take the view that such is the short-term uncertainty in the direction of gold and silver that it is wiser to stay out of temptations path.

Take the long term view and keep your holdings, the time whether to be a buyer or seller is in the balance, there could well be favourable buying opportunities if the price drops below $900 and continues down to $850, we cannot see any justification for that resistance to be breached while the present bullish news scenario stays in place.

Conversely a break out of substantial proportions could occur at any time as the realisation of the imminent damage that the introduction of vast amounts of new money under the guise of quantative easing will do to the prospects of diminishing purchasing power of the currencies taking part in this ill advised politically motivated short term palliative.

We started writing this at 1300 CET, it is now 1330 CET and spot gold has leapt by $10 an ounce to $936 in just half an hour – we wonder why?

European stock markets are up which should have kept the gold price steady at least. No other news has broken that we are aware of, although the rumours of a large seller that has overhung the market for a few days may have been put to rest, or, if true, the sale is concluded.

Watch this space!

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