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GoldCore Update: Gold to Target $1,200/oz by Year End on Central Bank Diversification?

|Includes: SPDR Gold Trust ETF (GLD), SLV

Gold touched an all time high again yesterday at $1,141/oz, closing 2% higher on last Friday’s close. Gold is currently trading at $1,132/oz and is higher again in euro and GBP terms - trading at €761/oz and £673/oz respectively.

Gold has fallen somewhat today in dollar terms with the dollar having rebounded somewhat. While US wholesale prices were reasonably tame - up 0.3% in October, the mortgage data showed that mortgage delinquencies hit another record in the third quarter, and this is contributing to weakness in equity markets. The central bank of Mauritius became the latest central bank to increase its gold reserves. The International Monetary Fund (NYSE:IMF) said it sold two tonnes of gold to the central bank of Mauritius at prevailing market prices on November 11 and that the proceeds amounted to $71.7 million. Mauritius' central bank said its gold holdings will reach a paltry 5.69% of its total foreign exchange reserves after the purchase, from 2.34% at end of October 2009.

Gold at $1,200/oz before year end remains a possibility but talk of a gold ‘rush’ and gold ‘frenzy’ is exaggerated. Gold is up less than 5 times in 10 years (5X $250/oz = $1,250/oz) whereas in the 1970s gold rose by more than 25 fold from $35/oz in 1971 to over $850/oz in January 1980. A gold rush is likely coming as there is no fever like gold fever, but we are a long way from there yet – especially as most of the public in the investment world is actually selling their gold rather than buying it.

gold price in 1970s and 1980s

Silver was the star performer yesterday, closing up 5.5% and above $18/oz for the first time in 16 months. Silver is currently trading at $18.28/oz, €12.28/oz and £10.87/oz. Silver has lagged gold in recent weeks and looks set to play catch up in the coming months with the nominal record high price of $50/oz of nearly 30 years ago remaining a viable price target in the long term.

Platinum Group Metals
Platinum is trading at $1,442/oz and rhodium at $2,475/oz. Palladium is currently trading at $376/oz.

Disclosure: no positions