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Friday, October 8, 2010

Gold Prices Today Rise as Fed Expected to Inflate

As the economic news continues to get worse, gold investors continue to push gold prices up as expectations the Fed will inflate or implement quantitative easing sometime soon, grows.

Gold futures' prices today have surged to $1,346.20 for December delivery, rising $11.20 on the Comex in New York.

Also continuing to fuel the gold price bonanza is the ongoing collapse of the U.S. dollar.

Much this is being precipitated by the release of the job report today, which showed another 95,000 jobs being shed. That has caused most to believe the Federal Reserve will inflate again sometime very soon. They've indicated numerous times in the last couple of months they're ready and willing to do it if they perceive the need to. Since they always perceive the need to, it's a surety they're going to.

That will continue to put downward pressure on the U.S. dollar and push the price up gold up even further.

Finally, there is the resultant inflation which will come from further pouring of money into the economy, which also works to gold's advantage. The perfect storm for gold prices continues, and nothing will hinder that from continuing on for a long time.

1 comment:

Anonymous said...

According to some recent light hearted research by Enquirica in order for the Canadian monetary base in Canada to be fully backed by gold backing would require the Canadian dollar price of gold to be C$ 4 million per ounce!!!

Enquirica's reached this conclusion by using a gold valuation methodology proposed by proponents as diverse as Dylan Grice at Societe Generale to GATA. The approach is simple - determine what gold price is necessary for each unit of central bank paper to be backed by gold reserves. Here is that calculation for Canada using M1 as the monetary numerator.

Gold Reserves: 3.4 tonnes
Money Supply: M1 – C$ 500 billion
Implied Gold Price = C$ 4,574,146/oz