Is The Bull Run In Gold Back?

January 23, 2012 | By | Reply More

By mid morning today, Monday, spot gold on the NY Comex exchange had risen to over $1680 an oz.

At the start of last Monday the yellow metal was trading at$1644 an oz. And four weeks earlier trading as low as $1525.

This suggests that gold’s correction which started last August after reaching the all time high of $1900 an oz is now well and truly over.

The next resistance barrier to overcome will be at $1700, if it breaches this then the next phase of gold bull run should extend to $2000 before this summer’s holiday season gets into full swing. Is the bull run in gold back? Both the fundamentals and the technicals now look positive to go!

Will The United States Return to the Gold Standard?

It was interesting to note that Republican Presidential Candidate, Newt Gingrinch, commented that the United States should return to the gold standard.

Whether this was just another political sound bite to help swing vote his way is open to question, but he did win the South Carolina primary so maybe he struck a nerve with the voters. If so, and he did get to the White House, would that be the last we will hear of his gold standard thoughts?

The Chinese Rush to Buy Gold

That, and a report that the Chinese have been rushing to buy gold to mark beginning of ‘Year of the Dragon’ may account for some of the less rational reasons for the continuing reawakening of the bull market in gold.

On a more serious level the further problems surrounding the Euro zone’s attempts to get agreement amongst the parties involved in the Greek crisis is still far from resolved, with the risks that a non voluntary agreement to restructuring among the parties will trigger payments on credit default swaps, putting French and US banks in the firing line!

And in case we forget deflation and inflation are both only a printing press away!

Silver Climbs

Silver has also seen a resurgence, although still a good way off its March 2011 high of $49 an oz. Having made a double bottom of  around $27 an oz in October and December it has made a steady climb back to over $32 an oz today.

It looks as if the worst is also over for silver with $35 an oz., the next hurdle to overcome, not too far away.

Watch Those ETFs

The Sprott Physical Silver Trust(PSLV) a New York listed physical silver holding ETF took a hit of 9% on the previous close as its premium over its physical holdings disappeared after warnings that its net asset value was inadequate.

In other words it did not hold enough silver to back shares.

On this note we have observed reports that SPDR Gold Trust (GLD), another physical metal holding ETF, and the world’s largest, did not increase its holding in gold last week to back its shares.

In the past we have been  both holders and advocates of this ETF and do not mean to imply that any problems may arise. Still forewarned is forearmed so it is worth investors in this ETF to keep a close eye on developments, maybe the managers know something of which us mere mortals are ignorant.

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Category: Precious Metal Investment News

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