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Gold: New high last week; Is it going higher?
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While gold rose 10% this year to $1072 an ounce on October 14, reminds me of in 1980 when gold hit a record $873 an ounce. Record government debt and interest rates close to zero are pushing gold higher for a ninth straight year, and the options and futures markets expect the rally to continue. With all-time highs the contract with the most open interest was the December call at $1200 and a lot at $1500.
"Gold is not at any peak," said Martin Murenbeeld, the chief economists at Toronto-based DundeeWealth Inc., which manages $58.5 Billion in mutual funds and brokerage accounts."The world's money supply has increased and gold hasn't kept pace," he said."Were now in a period where gold is catching up."
There are many ways to play gold, you can buy shares in gold mining companies like Newmont Mining Corp. (NEM),Gold Fields Ltd.(GFI) or Anglo Gold Ashanti Ltd. (AU). Now for you ETF buyers the SDPR Gold Trust (GLD) is one of the most popular that buys actual gold bullion. And you can buy the physical (one of my favorite) 24K gold coins like the Maple Leaf from Canada or my favorite the American Eagle from the United States Mint. Caution here is sometimes they run out for a couple of weeks due to high demand.
My forecast is gold will go to $1225 in the near term then a nice pull back and will launch for $1650 next year. Gold is your insurance against financial and economic disorder. It will protect against our dollar pounded by inflation and higher commodity prices. Jimmy Rogers has said many times over the years,"What we do know is gold is nobody's fool. Like a kind monetary prenuptial agreement, gold exits to settle the score when things go badly. Gold also exists to settle the score when governments become unfaithful stewards of the currencies they issue."
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