Friday, November 5, 2010

Gold Ready to Break $1,400 an Ounce

Gold continues to press toward the $1,400 an ounce mark as on Friday it traded as high as $1,398 before pulling back.

While not unprecedented, especially over the last year, gold did remain strong in light of the fact the U.S. dollar also showed strength, which usually carry an inverse relationship to one another; gold goes up when the dollar goes down and the reverse as well.

What determines that in most cases is the strength or weakness of the economy and the monetary policies of central banks that are being implemented at the time, including interest rates and whether the Fed is inflating through quantitative easing.

The price of gold should surpass the $1,400 level soon, as the announcement the Fed would be spending $75 billion a month for the next eight months pushed gold prices up quickly, and that will resume throughout the week with nothing to stop it from advancing.

There is no way interest rates will be raised any time soon, as the Fed and Ben Bernanke don't have the courage or the will to do it. So with the buying up of even more government debt, they're again creating the perfect environment for gold to soar while the U.S. dollar continues to collapse.

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