Resist The Temptation To Cash In Your Gold Profits

October 1, 2010 | By | Reply More

In mid morning trading in Europe today spot gold hit new heights yet again when the price rose to $1317.40 before dropping back to $1315 within 40 minutes before rising above $1316 shortly after.

A pattern seems to have developed recently when the price has performed with some strength in European trading by mid morning GMT before dropping back prior to the New York open and then regaining lost ground by its close.

Undoubtedly the temptation by traders to cash in on the `nice` short term profits that have occurred with some frequency during this stage of the yellow metals bull run cannot be discounted but the underlying strength of the steady rise to ever new highs is a strong indicator that gold has much further to go while not too much attention should be paid to those indicators showing the metal is overbought.

There is talk of those national banks reversing their long held policy decisions to sell gold and become  buyers as confidence in `paper` currencies continues to deteriorate, and, of course, China continuing to build up its gold reserves from a very low base. Difficult to think of a better use for its massive holding of dollars as the printing presses gear up for another $50 billion of quantitive easing that can only result in further devaluing the already dodgy greenback.

We  can only think that when China buys US treasuries with their low yields in the face of the imminent dangers of inflation taking off it is something of a PR gesture of good will or perhaps just a way of relieving themselves of vast hoards of dollars which if put into gold would send the price soaring out of sight in a very short space of time.

The financial pundits that have in the past largely ignored gold and its existence as a serious financial vehicle  are now beginning to pay attention and coming up with the usual variety of opinions to whether it is in a bubble or nearing a bubble, with guestimates to its eventual price being as high as $5000 and virtually every price in between during this current bull run.

We will content ourselves with resisting the temptation to cash in on our already very handsome profits and taking advantage of any significant correction to top up. There is every reasonable expectation that when, not if,  the bottom eventually drops out of U.S. stock markets the rush to liquidity will become the order of the day.

Then gold and silver will drop accordingly and for a short time before regaining their upward impetus. The consequent window of opportunity will be worth waiting for. On the other hand should you believe that the enormous injections of new money will keep the stock market propped up then buy gold now or when there are the inevitable minor corrections but be sure not to be left out of the market.

Right now gold and silver are the best play in town.

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