Great Sign for Gold: Rallying Alongside the Dollar

by Derek Hoffman

With zero-interest rate policy still in effect, the Gold Rush still continues. Tuesday, Gold reached record all-time highs while GLD broke $106 and continues to flex its strength in the market.

Last month, we recommended GLD in our Premium Monthly Newsletter as a buy at $100 and a hold so long as GLD holds the $100 mark. Our upside target is $115-120 (taking profits along the way, of course). So far we’re up over 6% in less than 4 weeks.

The rally in Gold is coming amidst a rally in the U.S. Dollar. This is a great sign for Gold because typically there is an inverse relationship between the U.S. Dollar and Gold. Thus, the demand for Gold remains sky high and should only continue until interest rate policy changes beyond rhetoric.

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Comments

[Mad Hedge F...:]

okn News broke this morning that, out of the blue, the Reserve Bank of India bought 200 metric tonnes of gold from the IMF for a handy $6.8 billion. The news set the gold market on fire, boosting the December futures $40 to an all time high of $1,088. It is the largest transaction in the barbaric relic since the Alaric’s Visigoths sacked Rome in 410 AD. It has been public knowledge for some time that the IMF was looking to unload 403 tonnes of the yellow metal in order to fund lending to poor countries. Many traders say this threatening overhang is why gold failed to definitively break out to the upside this year, despite six attempts. The expectation was that China would take this hoard as part of a broader diversification away from the dollar. Bringing India into the fray, which had no prior history of stockpiling gold, is a whole new plate of basmati rice. Not only does this raise the prospect of a bidding war with China for more gold reserves, other cash rich emerging market central banks are likely to join the mosh pit as well, no doubt panicked by the ominously rising whirr of printing presses in the developed countries. My short term goal for gold was $1,200, but I now have to raise that to the $1,300 favored by some chartists in view of the new dynamics. If you want to see my long term target, take a look at the chart below, which has gold zeroing in on its inflation adjusted all time high of $2,358. For those who prefer holding the barbaric relic of the physical kind, visit the tightest spreads in town on American Eagles and bullion at www.millenniummetals.net/ . And while you’re there, sign up for their free research product on precious metals.

Nov 04 06:15 AM