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HRAadvisory.com's David Coffin says gold prices are headed up. With HoweStreet.com's Victor Adair.

China have been accumulating massive amounts of commodities in the last 6 months or so , copper zinc oil aluminum , nickel , but the demand from the Chinese market have not picked up really except from the auto industry so the prices of commodities are likely to start to suffer in the short term , agricultural commodities may hold up a little bit better as they follow a whole different cycle from mining commodities ...The official currency of commodities The Dollar has collapsed against the Euro today The dollar yesterday dropped as much as 1.8 percent versus the euro, the most since May 8, The crude oil at $70 a barrel is at med cycle price .Gold Bullion for immediate delivery traded at $925.54 , Silver for immediate delivery rose 0.4 percent to $13.905 an ounce. Silver has outpaced gold this year, with an ounce of gold now buying about 66.53 ounces of silver . platinum climbed 0.4 percent to $1,166.50 an ounce. Palladium fell 0.5 percent to $235.50 an ounce .“The weakness in the dollar is going to have some positive impact on commodities,” Francisco Blanch , head of global commodity research at Merrill Lynch & Co Watch the video bellow....

Gold rose to $939.50 an ounce on the New York Mercantile Exchange’s Comex division
Silver rose to $14.005 an ounce
The dollar fell, heading for its biggest weekly loss against the euro in a month , The dollar declined to $1.4041 per euro from $1.3988 yesterday
Crude oil rose for a second day, trading above $70 a barrel

S&P 500 , dollar loses to the Swiss frank , Gold at 930 level could reach the $1000 an ounce if the dollar keeps on being weak , Gold could easily reach $1200 an ounce and up...The American dollar is coming into a period of weakness, according to Chris Locke, managing director of Oystertrade.com Management. “Cracks are starting to show,” he told CNBC, referring to the price of dollar/yen and the dollar/Swiss franc, which he said could drop to the even $1.00 level.

with the FED keeping on flooding the market with US dollar bills , the hyperinflation scenario becomes becomes more plausible and it is now a matter of when rather than if ...Marc Faber amongst other experts warn of a Zimbabwe like Hyperinflation , the rush for the gold have started , There is a huge demand for both gold and silver right now in India and North America. North American shops are completely deprived of silver. Indian shops are empty of both silver and gold. Even the Indian banks don't have any gold or silver.

What make Precious Metals precious:

precious metals are rare metals found in very small amounts in the planet earth hence the high economic value
Gold, silver, and the platinum group metals are known as the precious metals. Some craftsmen also call them the noble metals.Relatively scarce, highly corrosion-resistant, valuable metals. Gold, silver and platinum are examples of precious metals.Materials such as gold, silver, and platinum that offer an alternative form of investing The industry defines gold, silver, platinum, and palladium as precious metals. Unlike gemstones, the term precious is still widely accepted when used to delineate High-value, low-volume, scarce metals such as gold, palladium, platinum and silver.This is a video I have created to explain the reasons behind why precious metals have intrinsic value. Peter Schiff, Ron Paul, Jim Rogers, Marc Faber, Gerald Celente, Gold, Silver, Platinum, Fiat Money, Inflation, Currency Devaluation, Federal Reserve, Banks, Bank of England, Dollar Collapse.

In the short-term, gold will stay in the $925-960 range, where it has been holding steady for the past few months, according to Philip Newman of GFMS. “The key factor really is where we see investment demand in the gold market?” he told CNBC Tuesday.
Today Gold for immediate delivery climbed 0.4 percent to $941.42 an ounce at 9:40 a.m. in Singapore. The metal is up 6.7 percent this year as longer-term inflationary expectations boosted demand for a hedge against accelerating consumer prices. Gold futures for August delivery were little changed at $941.30 an ounce on the New York Mercantile Exchange’s Comex division, up 1.8 percent this quarter.

Will Rhind, Head of U.S. Operations at ETF Securities after Gold has broke the $1600 it has pulled back a little bit due to some profit taking says Rhind :" what we are seeing is Gold gone to $1600 which is a new all time high for gold and since then in the last couple of days it has pulled back a little bit , and if you look at the trend of gold in the last couple of years what we typically see is when gold has made a new high such as the $1600 level it has been subject to profit taking and therefore the price retraced a little bit from its all time high "

The Strong dollar puts pressure on Gold , other precious metals drop to , Gold is seen as a safe heaven against the dollar fluctuations and the fear of inflation besides the increased liquidity in the system, Gold sells at around $950 this morning . a stronger dollar reduced demand for the metal as an alternative investment ...there are certainly a set of factors behind this drop of gold ...China has been lately stock piling in gold , which has reduced the availability of gold on the market , jewelry demand is soaring particularly out of India which is a big market for gold jewelry

The Strong dollar puts pressure on Gold , other precious metals drop to , Gold is seen as a safe heaven against the dollar fluctuations and the fear of inflation besides the increased liquidity in the system, Gold sells at around $950 this morning . a stronger dollar reduced demand for the metal as an alternative investment ...there are certainly a set of factors behind this drop of gold ...China has been lately stock piling in gold , which has reduced the availability of gold on the market , jewelry demand is soaring particularly out of India which is a big market for gold jewelry

Will Rhind, Head of U.S. Operations at ETF Securities after Gold has broke the $1600 it has pulled back a little bit due to some profit taking says Rhind :" what we are seeing is Gold gone to $1600 which is a new all time high for gold and since then in the last couple of days it has pulled back a little bit , and if you look at the trend of gold in the last couple of years what we typically see is when gold has made a new high such as the $1600 level it has been subject to profit taking and therefore the price retraced a little bit from its all time high "

Gold prices rising tendencies may be at an end some Wall Street experts say due to the fact that banks are more reluctant to issue any more loans and the fact that unemployment is rising at a high scale ..Gold price has rallied 8.7 percent this year on fear of hyper inflation and the search of an alternative reserve to the dollar bill as a reserve currency ..experts like Jim Rogers and Marv Faber say they will continue to buy gold and commodities whether the economy grows or declines because in both cases gold silver precious metals raw materials natural resources and commodities in general are the best place to be Marc Faber said last month that US economy will become like that of Zimbabwe ...World gold mine production in 2009 is expected to increase by 20 tons to 30 tons from 2,416 metric tons last year, thanks to growth in the mines in Asia, Australia and west Africa,

Gold Jumps on Dollar Slide, Inflation Concern; Platinum Surges
By Halia Pavliva

June 4 (Bloomberg) -- Gold prices rose on speculation that the slumping dollar will spur inflation, boosting the appeal of precious metals as a hedge. Platinum surged more than $55 an ounce to the highest since September.

Gold and silver futures bounced from overnight weakness Tuesday in response to a softer U.S. dollar, although the metals also ran into bouts of profit-taking.

August gold rose $4.40 to $984.40 an ounce on the Comex division of the New York Mercantile Exchange. July silver rose 22 cents to $15.955 and peaked at $16.02, its strongest level since August.

"Overnight, you had some profit-taking across the board in commodities," said Bob Haberkorn, Lind-Waldock senior market strategist. "People were anticipating dollar strength on [Treasury Secretary Timothy] Geithner's comments in China.

The gold rally is reaching its peak, according to Charlie Morris of HSBC Global Asset Management, who told CNBC that gold is “merely reflecting (US) dollar weakness.” Against other currencies, there is no rally, he said.

By Nicholas Larkin

June 2 (Bloomberg) -- Gold rose in New York and London as a decline by the dollar increased the metal’s appeal as an alternative investment. Silver also advanced.

The U.S. Dollar Index, a gauge of the currency’s value versus six counterparts, fell as much as 0.8 percent to the lowest since Dec. 18. Gold, which typically gains when the dollar weakens, touched a 14-week peak before closing yesterday and silver reached its highest in almost 10 months.

Investors continue “to track moves in the dollar, the key factor driving gold,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a note. “As optimism grows that the worst of the economic downturn is over,” the correlation between gold and the dollar has returned, he said.

Gold futures for August delivery rose $1.90, or 0.2 percent, to $981.90 an ounce on the New York Mercantile Exchange’s Comex division at 8:43 a.m. local time. The contract earlier fell as much as 1 percent. Bullion for immediate delivery in London gained $5.16, or 0.5 percent, to $980.43.

The metal slipped to $973.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $981.75 at yesterday’s afternoon fixing. Gold briefly traded above $1,000 in the U.K. capital on Feb. 20, the first time the metal had breached that price since March 2008, when it climbed to a record $1,032.70.

“The week is likely to be dominated by further developments on the currency market, with the rally possibly slowing down if the dollar holds above 79-78.5” as tracked by the index, Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a note. The index fell as low as 78.524 today.

Gold Trust

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, rose to a record 1,134.03 metric tons yesterday, the company’s Web site showed. That’s the first gain since May 22.

“One day of decent flows is not enough to change our minds on the near-term outlook for gold,” John Reade, UBS AG’s head metals strategist in London, said in a report. “We are seeing no strong physical gold investment, and we hold our one-month forecast for gold at $950 an ounce.”

Today move has certainly caught many of you off guard. As I am typing, silver price stands at $15.65. Considered by many as the key resistance and psychological level, $15 price hasn't been seen since last August or so. Just before the current recession really got going. There are two contradictory forces currently driving the price of silver. The first one is the safe heaven buying by those who think silver coins and bars will become real money, and please, you can call them what you want - I affectionately call them silver bugs, but don't discount their numbers and purchasing power. As our government prints dollars which sooner or later will inevitably flood the system, silver is becoming a stable value alternative which will hold its value compared to the lower value of each dollar. To put it simply, it will cost much more dollars to buy an ounce of silver. Consider it a cheaper and more liquid safe haven alternative to gold.

The second force is backed by those who have been buying silver in hopes of soon-to-come economic recovery. Since silver is industrial metal, its price fluctuates with economic news which recently have become more positive, or shall I say less negative for too many. Silver is used electronics, dentistry, medicine and photography. The latter though has been using silver much less since digital photo technology became wide spread. But new applications such as solar power mirrors may drive silver price higher.

How high? I have seen numbers ranging from low $20s to $100+. Some say that because most of the silver has been mined out of earth, its shortage coupled with inflation and demand will drive its price to astronomical levels. Some project $1,000 per ounce silver price in foreseeable future. That may seem a bit insane, but consider what Marc Faber, the publisher of the Gloom, Boom & Doom report said, according to Bloomberg. The U.S. economy will enter hyperinflation approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates. We can laugh all we want, but it was Faber who advised buying gold at the start of its 8-year rally, when it traded for less than $300 an ounce, and told investors to bail out of U.S. stocks a week before the so-called Black Monday crash in 1987. Though Faber recommends buying gold, silver will certainly follow. In my opinion, we could see silver price doubling within 2 to 3 months.

David Einhorn, Greenlight Capital president, discusses gold as an investment.

Gold is probably on the verge of a fairly sizable breakout to the upside, says Matt Zeman, trader at Lasalle Futures Group. He tells CNBC's Karen Tso that the precious metal may test $1,200 in the coming months.

May 27 (Bloomberg) -- Gold prices rose in New York, reversing an earlier loss, on increased demand for the metal as a store of value while the dollar pared gains. Silver advanced.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, climbed 1.9 percent to 1,118.76 metric tons as of May 22, the first gain in seven sessions, the company’s Web site shows. Gold assets held by Zuercher Kantonalbank’s exchange-traded fund jumped to a record 4.603 million ounces last week, the bank said today.

“Investors took advantage of intraday weakness by adding to their long positions,” Tom Pawlicki, an analyst at MF Global in Chicago, said by e-mail.

Gold futures for August delivery rose $4.50, or 0.5 percent, to $959.60 at 12:21 p.m. on the New York Mercantile Exchange’s Comex division. The metal fell as much as 0.7 percent earlier today. Futures for June delivery, the most-active contract until today, climbed $4.30, or 0.5 percent, to $957.60 an ounce on the Comex.

Bullion for immediate delivery in London climbed 0.6 percent, to $957.95 an ounce. The metal rose to $949.50 an ounce in London’s morning “fixing,” used by some mining companies to sell their output, from $945 in yesterday’s afternoon fixing.

Santella says : " So in the short term, I could see gold in December coming down to around $700, and at that level the jewelry market will pick up again, so it will buoy it and hold it up between 700 and 800. In the longer term, it should come off, or if there’s inflation, maybe it will hold up around there. Those are harder things to see of course, so I’m just guessing.as to the three industrial precious metals, which are silver,platinum and palladium. Silver consumption has been brisk and remains brisk, and part of that, I believe, is the jewelry sector, which is that people have turned to silver to buy jewelry. So there’s a lot of jewelry sales in silver, so silver remains brisk at these levels … even right now it’s trading above $13. It can remain there for a while, though I think silver will also trade down because it follows gold a lot of times, as there is also a percentage of people that buy for investment purposes.Platinum and palladium are being held up by investment money at the moment, but their primary demand is industrial. Once people realize they’re not going to get any earnings if the metals stay stagnant in the price level, they will abandon it, and so I think platinum and palladium can still come off a bit." he added

MidasLetter.comMonday, May 25, 2009Here we go again. The forces of legitimate money versus the incumbent purveyors of the candy floss economy squared off at the $1,000 an ounce line over which yet another battle will be fought. Arrayed against either side are formidable new elements and tried and true old ones. As usual, the first volley has been catapulted over the walls of the hucksters by the defenders of the essential timeless truth of gold’s naturally stored value against the counterfeit paper currencies.The liabilities of the enemy have increased, and the short positions in the COMEX market are sufficiently stacked that the big bank defenders simply cannot allow gold to win decisively. G7 governments are allied against gold to a man, while emerging economic behemoths China and Russia stand in opposition.In particular, China’s revelations that it has been in a continuous accumulation mode for the last several years and is now the fifth largest sovereign reserve of gold has created an impetus in the gold camp that has been seen lacking in the past. Institutional and sovereign investment entities now perceive a floor in the gold price based on this information, and one must beg the question as to why China would make such a revelation when it threatens to undermine the value of its $2 trillion in U.S. debt holdings.China has also been careful to avoid buying gold on the international market, for fear, it says, of creating a stampede into the precious metals that would immediately increase the cost of its stated intention to continue accumulating gold towards the backing of the yuan (renmibi) as a global reserve currency.Yet that is precisely what has happened. Ostensibly, the justification for tipping their hand exists in the fact that they’ve resigned themselves to the fact that selling poison toys and pet foods to Americans in exchange for a currency that loses value like light into a black hole is an acceptable if imperfect transaction. With $50 billion a year in interest payments from the U.S., they can hedge the risk buy using it to buy gold.With the perceived floor arguably at $850, downside risk is limited in gold far more so than in U.S. treasuries, which, if mainstream media is to be taken as remotely credible, is the current favorite of safe haven investors.‘Safe Haven’ is about to get painted with same fragrant brush as ‘AAA-rated’ investments.Goldbugs are salivating at the prospect of vindication, but seasoned veterans of the war know that the governments and central banks arrayed against gold are not fair fighters. Since the largest players in the futures market occupy both sides of the contract, and never take delivery of the physical gold, they can orchestrate a perpetual negative sentiment towards gold by driving the future price downward by simply amping up the short positions, thus making gold appear poised for a sell-off. This has been standard operating procedure for the last decade, and it is interesting to note that ever-bigger short positions are having less influence over shorter durations before the bulls shrug off the flimsy performance and take gold higher.Critics and observers of this U.S. Dollar image management program point to the fact that such activity, while shoring up demand for U.S. Dollar debt in the short terms, effectively undermines the entire global economy, and is among the fundamental causes of financial crises such as the housing collapse and the whole current global financial fiasco.Proponents of this manipulation, who are increasingly legion in number, correctly predict an inevitable bursting of the damn catalyzed by investment demand overwhelming the short positions, forcing them to buy and cover to limit losses, which will, in itself, stimulate the gold price even further.With the limited oversight and feeble reporting standards of the CFTC, the ploy is facilitated by complicit (or ignorant) regulators who ensure data is obfuscated and disclosure limited. It has been this collective effort on the part of the Dollar Defenders that continuously defeats gold’s advances, repeatedly castrating the bulls and sending them whimpering to lick their wounds and regroup.But China is now leading the charge, and the bet is that they’re willing to forgo the lost value of their USD holdings to decisively undermine the global reserve currency once and for all and replace it with the Yuan, a move that would effectively mark the beginning in the shift of the global balance of power from west to east.The United States, overextended militarily across the Middle East and Asia, with new fronts threatening to open in Iran and Pakistan, is perilously close to an international nervous breakdown. China’s opportunity is to ride to the rescue bearing smiles and steamed pork buns while dividing up what is left of the American industrial asset pool.Our leadership of the last decade (or more accurately, absence thereof), eager to lubricate the workings of multinational financial interests, have inadvertently played into the patient hands of their biggest creditor by prostituting the national currency shamelessly to the point where every nation in the world can see what used up piece of spent jet trash the old USD has become.While mainstream media dismisses the idea of the Yuan replacing the dollar as the international monetary standard, those of us who have tuned out at the perception management program on CNN recognize the event as halfway accomplished.The truly explosive moment for gold will occur when the Chinese, at their discretion, decide to spring the trap, and abandon USD completely in favor of gold, suddenly spiking the price of gold straight north in tandem with the complete collapse of the U.S. dollar.Don’t pay any attention to the second rate hacks trying to claim credit for predicting the fall…its been predicted repeatedly throughout history from Nostradamus to Roubini. Any student of economic history with 20/20 vision could see this coming, and here it is. “I told you so” is a waste of time. Who’s offering a solution?Whether or not this particular battle at the Great Wall of $1,000 an ounce is the mother of all battles remains to be seen. Desperate times call for desperate measures, and while G7 governments collude to retain power, the unforeseeable is the greatest threat to gold.That being said, veteran observers are optimistic, to say the least.According to Bill Murphy, intrepid soldier of gold wars and standard bearer for the Gold Anti-trust Action Committee,"The Gold Cartel is giving it all they have no, as evidenced by the sharply rising gold open interest on the Comex ... up some 23,000 contracts on Wednesday and Thursday. They are doing all they can to counter new spec buying.My hunch is the next time we see $1,000, and that could be very soon, gold ought to take off from there, giving us more upside dynamic daily moves. The reasons to own physical gold are off the charts ... HUGE investment demand, shrinking visible central bank supply (unrelated to the cabal), shrinking mine supply, shrinking dollar, concerns over sovereign wealth debt, a horrible US economy, and a US printing press that is going flat out and will have to for some time to come.In my opinion, all gold has to do is to stay over $1,000 for a few days, and then all kinds of bells and whistles go off."

Bill Murphy of GATA.org and LeMetropoleCafe.com discusses the economy and the gold and silver markets with Mike Maloney

Gold is beginning to gain investors' interest given all the debt funding we are seeing around the world, notes Frank Holmes, CEO & CIO of U.S. Global Investors. He tells CNBC's Martin Soong & Amanda Drury that gold may test $1,200.

Investors are still flocking to gold, according to the World Gold Council's first-quarter Gold Demand Trends Report. Rozanna Wozniak from World Gold Council considers the outlook.

How and where and when to buy Gold as a long term investment and inflation umbrella :

The fever of gold continues as investors pour into Gold and Silver in order to escape the European and America debt abysses .Even today, the precious metal rises above the threshold of $ 1660 per ounce. It is considered a "safe heaven" of wealth against the odds of the the U.S. and Europe the public debt crisis. By the end of the year gold price could go up as high as 3 thousand dollars. The problem is that the financial system, is incapable of producing real wealth but just debt through credit


Today the gold price is growing, as it is used to do for now almost 11 years. Yesterday it rose above a threshold of $ 1600 per ounce . Analysts say that this "fever" becomes more frantic when investors try to find some "haven" protection of wealth, before the abyss of the European American debt .

European governments, under pressure from the International Monetary Fund, will meet again in Brussels this week to re-think back about the Greek debt, Barack Obama juggles with the failure to find an agreement about raising the public debt ceiling in the U.S., while ratings agencies are threatening to downgrade the United States's rating.

This year the price of gold has increased by 13%, the biggest jump for 90 years. According to analysts, it is possible that if the debt crisis increases, the price of the precious metal will reach $ 1650 by the end of 2011 and will double in a few years. Considering that China and India are among those that most require it , the gold price could reach up to 5 thousand dollars an ounce by 2020.

The economist Bob Chapman said that "we will see a doubling of the price of gold, around 3 thousand dollars an ounce already this fall". Some time ago I calculated that if you take the entire global monetary liquidity expressed in the main reserve currency, the dollar, and you divide by the amount of physical gold available,This would lead to absurd figures, in the order of about 30 - 60 000 U.S. dollars per ounce. The real problem, is that "there is so much paper around, a lot of finance, and a few products of real value .Gold even at $1600 is still very under-priced said James Turk yesterday , there is definably a shortage in the physical gold and silver and the prices have only one way to go and that is up up and up with few corrections along the way...
Related ETFs : Ishares Silver ETF (SLV), SPDR GOld ETF (GLD) SPDR GOld ETF (GLD), Powershares DB SPDR Gold ETF (GLD), Newmont Mining (NEM), Barrick Gold (ABX), GoldCorp (GG)

By Halia Pavliva

May 15 (Bloomberg) -- Gold prices rose, extending a rally to two weeks, as investment demand increased on rising consumer prices and signs that a rally in U.S. equities may be ending. Silver futures fell.

The Standard & Poor’s 500 Index headed for a decline this week amid speculation that the rally has outpaced prospects for corporate profits and economic growth. Some investors buy gold as an alternative to shares. U.S. consumer prices excluding food and fuel climbed 0.3 percent, the Labor Department said today.

“For gold and silver, we are going into a win-win situation,” Ashraf Laidi, the chief market strategist at CMC Markets in London, said in a Bloomberg Television interview. “When we will have a retreat in the financials and the rest of the stocks, we will have some rotation into metals.”

Gold futures for June delivery advanced $2.90, or 0.3 percent, to $931.30 an ounce on the Comex division of the New York Mercantile Exchange. The price gained 1.8 percent this week, following a 3 percent increase last week.

“Gold prices have turned higher as the market’s focus turns to the unexpected jump in the core consumer-price index,” said Ralph Preston, a Heritage West Futures Inc. commodity analyst in San Diego. “A close above $930 could be explosive.”

Silver futures for July delivery slipped 3 cents, or 0.2 percent, to $14.01 an ounce. The metal still gained 0.4 percent this week.

Equities, Dollar

The S&P 500 is down 5.1 percent this week. The gauge rallied eight times in the past nine weeks as some economic reports suggested that the worst of the recession may be past.

The dollar has dropped 1.8 percent this month against a basket of six major currencies, enhancing the appeal of gold as an alternative investment.

“Gold has been the object of affection for hedge funds and also has paid increasing attention to the dollar lately,” said Tom Pawlicki, an analyst at MF Global in Chicago. “That helps explain why gold has rallied both when stocks have risen and fallen.”

Silver has climbed 24 percent this year, and gold is up 5.3 percent.

Will the wealth destroying policies of the Obama Regime make the People’s Bank of China full-fledged Gold Bugs? Chinese officials announce their purchases of Gold, and continue to raise concerns about U.S. economic policy and the associated implications for the value of the U.S. dollar. One might think they have indeed become Gold Bugs. If that be the case, no real surprise should be registered. A casual observation of government economic policies around the world, and in particular in the U.S., since the invention of the central banking and fiat money would convert any rational individual into a Gold Bug. Given the wealth destroying policies of the Obama Regime, a large number of people might wake up to be Gold Bugs.


In the above chart is plotted a dollar index built on the median movement of the dollar versus a basket of major currencies. In today’s world, capital flows dominate all other considerations in determining the relative values of currencies. The widely used trade-weighted index is a fairly obsolete concept, built on early 20th century concepts of trade, but remains commonly used. The median is used as a measure of central tendency to avoid the distortions that often develop when using common averages.

In that chart is an ominous picture. The U.S. dollar is breaking what little support might have existed. The U.S. dollar is about to go into free fall. Just as traders were quick to ride the dollar higher, on false pretenses, traders will be as quick to sell the dollar. Already, some currencies have rallied strongly against the dollar. No one observing a chart of the U.S. dollar is going to be willing to grab this “the falling knife.”

Part of the impetus for the dollar’s rally of the past year was the repatriation of funds made necessary by the joyful collapse of the hedge fund sector. Fundamentals, of any kind, did not exist to support the dollar’s rally. What is now happening is the correction of non-equilibrium values in the foreign exchange market. And just as the dollar overshot on the upside, it will overshoot on the downside.
We can now reasonably expect that the dollar will make a new low, as measured by the index in that chart. That development would have some strongly positive implications for the price of US$Gold. A new low in that dollar index translates into a U.S. dollar price of Gold of more than US$1,100. Gold Bugs may indeed have a joyous holiday season this year, brought to you by the Obama Regime’s destruction of the dollar.

A natural question that then follows is when that price might be achieved. In large part the speed of the assent will be dictated by the level of institutional participation in the Gold market. Based on the experience of the past year we can make some time estimates, though frail they are. If the institutions are active in the market as the dollar crumbles, US$Gold could achieve that level in a September - December framework. Without that participation, December - March would be more likely.

That $Gold is under valued in an intermediate time frame is only part of the equation. Two remaining questions must be answered.

If I do not live in U.S. dollars, should I buy Gold?

Finally, should we be buying Gold today, at these prices?

Flip side of the price of Gold in your currency is the Gold price of your currency. Gold price of your currency is how many ounces of Gold are necessary to buy one unit of that currency. The calculation is simply 1 divided by the price of Gold in your currency. If the price of Gold declines when denominated in your currency, which happens when your currency strengthens, the Gold price of your currency is rising.

To simply things, let us consider the chart above. What has been done is to plot the rank of the major currencies by the strength of the Gold price of that currency. In other words, the Gold price of the South African rand has been the strongest of the twelve currencies listed. The South African rand has been too strong relative to Gold. The currency is likely over valued relative to Gold. Or from the other direction, the Gold price of the currency is probably too high. The higher your currency ranks in this chart, the more under valued Gold is likely to be in terms of your currency.

Thus far, we have set an intermediate term target for $Gold of US$1,100. Second, we have identified in which currencies Gold is probably the most under valued. Final question deals with whether or not we should be buying today.


To help answer the final question, let us consider the chart above. $Gold has broken the down trend line which had served as resistance. However, it is now short-term over bought. That condition comes from the rapid decent of the U.S. dollar in recent weeks. Additionally, institutional recognition of the role of Gold in portfolios has become more widespread this year.

Given that $Gold is probably short-term over bought and some possibility of Summer doldrums developing, investors should probably simply use weakness to do their buying. $Gold prices below US$900 should encourage all buyers. Price weakness in the AM on New York City time should be used in particular. Those investors living in currencies at the top of the second chart should be aggressive buyers during such periods.

Summer of 2009 may be the last great buying opportunity for Gold. What we mean is that the prices that develop in the next few months, or weeks, may not be revisited. In the next leg of the structural Gold bull market, US$1,000 is more likely to be a floor than a ceiling. Waiting to buy Gold till the next announcement of purchases by the People’s Bank of China may be too late. China’s most recent comments on the dangerous economic policies of the Obama Regime remind this author of an old joke. When the wife complained to the farmer for shooting the mule, he turned to her and said, “That’s once.”

Gold needs to break through the $930 level first in order for investors to snap it up, suggests Jonathan Barratt, managing director of Commodity Broking Services. He speaks to CNBC's Oriel Morrison.

May 14 (Bloomberg) -- Gold may extend its two-week advance after breaching the so-called resistance level that defined the precious metal’s bear trend since this year’s peak in February, Standard Bank Group Ltd. said, citing trading patterns.

This indicates the “corrective phase has ended,” Darran Grabham, the bank’s technical analyst, wrote in a note yesterday. “This is a positive development, but we are not currently forecasting a move to a new high.” A resistance level is where sell orders may be clustered.

“A break above $932 is forecast in the weeks ahead, yielding a move into the $960 to $966.70 area, from where a reaction is envisaged,” Grabham wrote.

Gold for immediate delivery traded little changed at $925.47 an ounce at 10:01 a.m. Singapore time and has gained 1 percent this week. The precious metal is down 8 percent from this year’s intra-day high of $1,006.29 on Feb. 20.

The advance may stall at $932, with the $900 to $890 area providing support to ensuing retracements, Grabham wrote. If the anticipated sell-off does not materialize around $960, the rally may extend to $980.

“Gold weakness back below $890 turns the outlook neutral, while continued selling through $880 again exposes the market to the pivotal $869 to $865.80 support base,” he wrote. “A sell signal will be initiated below $865.80, initially yielding a decline to $840.”

By Glenys Sim

May 13 (Bloomberg) -- Gold climbed to the highest level in six weeks as a drop in the dollar boosted demand for the precious metal as a store of value.

Bullion has gained 1.2 percent this week as the Dollar Index, which tracks the greenback against six major world currencies, slid 0.6 percent in the same period to a four-month low today. Gold was also boosted by crude oil’s rally to a six- month high, increasing demand for the metal as a hedge against accelerating consumer prices.

There may be “a spike in inflation” following U.S. government measures to revive the economy, Raymond Goldie, an analyst at Salman Partners Inc., said in a report. The measures may generate “an excess of U.S. dollars in foreign markets, ultimately creating weakness in the U.S. dollar,” he wrote.

Gold for immediate delivery gained as much as 0.5 percent to $928.17 an ounce, the highest since April 2, and traded at $927.63 at 2 p.m. Singapore time. Bullion, denominated in dollars, tends to move in the opposite direction to the currency.

Gold for June delivery in New York added as much as 0.6 percent to $929 an ounce before trading at $928.70.

The dollar fell for a second day to a seven-week low versus the euro after Chinese reports added to signs the worst of the global economic slump is over, sapping demand for the currency as a refuge.

“Given the inverse relationship between the U.S dollar and the price of gold and silver, this should provide a positive catalyst for the price of the precious metals,” said Goldie.

Among other precious metals for immediate delivery, platinum was up 0.9 percent at $1,145 an ounce and palladium traded little changed at $234.50 an ounce. Silver gained as much as 1 percent to $14.38 an ounce, the highest since Feb. 24, before trading at $14.32.

Nothing buffs gold better than a thick coat of fear. Gold futures soared to record levels last March and investors have shown renewed interest in investing in the commodity that has typically been used as a bulwark against inflation and other currency risks.

"Gold is a very effective hedge against uncertainty because even as investors are watching the value of their equity investments plummet, gold still has value. In that way, gold can help diversify away some of the risks in an investor's portfolio," said Tom Pawlicki, a precious metals and energy analyst at MF Global.

Gold, a scarce metal that has incited wars, expeditions and conquests throughout history, has retained its value and investment appeal largely because of the gold standard, which dictated that all paper money would be backed by gold reserves. Even though U.S. President Richard Nixon quashed the U.S. dollar's direct convertibility to gold in 1971, the precious metal only gained popularity as a safe-haven investment since the double-digit level of inflation that plagued the economy during the period undermined the value of the U.S. dollar. In January 1980, gold hit US$850 -- its long-standing record until the current financial crisis led investors to run the price up to US$1033.90.

Inflationary threats have been supporting strong gold prices as investors become increasingly wary of the Fed's plans of pouring money into the financial system in hopes of rebuilding asset values and evading deflation.

The risk, of course, is that anti-deflationary actions will go too far, resulting in high levels of inflation or even hyperinflation.

The U.S. Federal Reserve has been buying assets including government bonds to lower interest rates and ease the de-leveraging process. In order to mitigate remaining debt that's clogging balance sheets, the Fed has the ability to increase the money supply until eventually enough inflation is created to absorb outstanding debt.

"However, it is not clear, with a failed banking system incapable of transmitting the Fed's 'high-powered money' into new loans, how well or quickly such a 'reflation' policy would work," said UBS analyst Daniel Brebner. In such an instance, Brebner expects gold to track inflation since it isn't tied to currencies.

Dr. John Mathis, a professor of global banking and finance at Thunderbird School of Global Management acknowledged that hyperinflation is a threat given the massive dollar value of bailout actions. He said the challenge for central banks will be determining the right rate at removing excess liquidity from the system.

Hyperinflation concerns are shared by Axel Merk, president and founder of Merk Investments. He remains very concerned that recent policy actions will spur high inflation that the government won't be able to tame.

"The amount of the stimulus is going to be much more than people predict. I don't think the government has an exit strategy and there's been way too little effort to look ahead. They're trying everything just to prop up a broken system," Merk said, adding that in the hard currency fund he manages, they have a 14.4% allocation to gold, which is higher than usual.

With gold acting as an effective hedge against uncertainty, deflation, and inflation, why bother investing in anything else?

A big downfall to investing in gold is that the precious metal doesn't offer the same return potential that equities do --particularly in a recovery environment as the current market is eagerly awaiting.

"When the economy begins growing and if the Fed shows that it's on top of the inflation curve, then there's no reason to invest in gold because equity markets will offer much better returns," said Pawlicki. The Fed has been selling government-backed bonds to help swallow excess liquidity. If economic stimulus measures successfully return confidence to the market and banks loosen their grip on lending, the stock market is likely to heat up, leaving gold in the cold.

Current gold prices seem to suggest that government actions are having their intended effect.

"As fiscal and monetary stimuli kick in, the slowdown in the global economy is easing," said Francisco Blanch, a commodity strategist at Banc of America Securities-Merrill Lynch Research, in a recent note. "Risk perceptions are clearly on decline with the VIX having fallen 33.0% from levels above 50.0% just a couple of months ago. Equities have risen for six successive weeks, with the S&P 500 up more than 28.0% from its low in March." Blanch also noted that as a result, gold prices are showing less volatility.

According to Pawlicki's estimates, gold prices will hold in the mid-US$950 to US$1000 range in the near-term. Once the economy begins showing signs of recovery and investors' risk appetite improves, however, he sees prices dipping to between US$750 and US$800.