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Alert: Gold Surges Through The $1,000 Level

8 September 2009 One Comment

Good news for gold investors today as gold has bust through the key $1,000 level.  This marks the third time in recent years that we have plowed through this mark.  I believe the stage is set for a sustained move higher and I will not be surprised if the $1,000 level becomes the floor here.

Interestingly, I sold off my positions in GLD and SLV while the government is looking into changing the regulations on commodity based ETFs.  I prefer not to be in a position that could be affected by something other than normal market forces (the government).  I will most likely be focusing on gold mining stocks and ETFs such as GDX and AUY (which I currently hold).

One of the major drivers in this move higher for gold is China.  China has been consistently frustrated with the U.S. monetary policy and has been divesting many of its reserves and buying gold.

Click here to read an article from the UK Telegraph regarding the relationship with China and the U.S. monetary policy and how that impacts the price of gold.

The Bottom Line

Look guys, our economy may be bottoming, not even sure what that means anymore, but it is absolutely clear that the U.S. consumer is not coming back to previous levels.  This leaves the government to fill in the demand gap with government programs and incentives (i.e. bailouts, Cash for clunkers, cash for appliances, first time home buyer programs, etc. etc.) and I promise you that we have only seen the start of these programs.  Reading the recent article from the AP about the “new normal” in America, it should become clear that our consumption based economy will be sluggish for a while which means the printing press is just getting revved up.

Sluggish consumer = government programs = printing money = surge in gold prices

Update: Check out the following article to see Alan Greenspan warning of future double digit inflation.  Greenspan who pretty much single-handedly created the past couple asset bubbles is now going out on a limb here and predicting possible inflation.  What a joke.

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