Gold passes $1040 – Silver Passes $17
Source: http://feedproxy.google.com/~r/YourFinancialFuture/~3/5mRHnaNqd9w/Posted on Wednesday, October 7th, 2009 | In Gold Markets
In intra-day trading yesterday gold smashed through the last all time high in nominal USD terms.
A colleague of mine asked me yesterday “So what do you think of the price action?”
My response “Not much”…which elicited a chuckle.
The truth is, these numbers in reality are purely psychological, and from a fundamental point of view, just another number in a series of numbers in a secular bull market.
The interesting thing to remember about this is that the unit of measurement that gold is being measured in (the USD) is continually devaluing. It has in fact lost over 96% of its purchasing power since the creation of the Federal Reserve System (coincidence?)
Dollar Collapse – Loss of Purchase power since 1913One of the biggest myths about gold is that it is breaking records for value and is very expensive….I am sure the FED would be happy as a clam to have you believe that.
The reality is, that when adjusted for inflation using the governments own data, gold in todays dollars would have to reach $2358 to match the last high in 1980 in terms of real buying power.
CPI Adjusted Gold PriceThere will come a time to sell gold, and when it comes I will be selling. The time I think, is not now.
On the contrary, I am firmly convinced that the current market rally is no more than a suckers rally identical to what happened in the great depression, after which the market promptly fell 90%.
Fundamentals continue to line up which indicate a lower Dollar, which is the most powerful correlation in reverse to gold. In other words, dollar goes down, gold goes up.
Gold Versus DollarThe most powerful fundamental aside from the fact that the US goverment has gone into Quantitative Easing overdrive, is that according to many experts, the USD is now the target for the currency carry trade.
The carry-trade deals in trillions of dollars, and is a massive force when applied to any currency. This force is not positive by the way. It reminds me of this:
The Carry Trade Target: USDGot gold yet?
Last 5 posts by Alex Stanczyk
- Sprott: US Gov Dead Man Walking - October 21st, 2009
- Bank of England Governer: Regulation can not stop bank failures - October 21st, 2009
- Dollar Dead-Pool - October 15th, 2009
- Barclays: Gold can go to $1500 - October 7th, 2009
- Kiyosaki: I invest for Cashflow and Inflation, not capital gains - September 30th, 2009
 About Alex Stanczyk (http://rapidtrends.com/blog)
Alex Stanczyk is the editor of Your Financial Future. Mr. Stanczyk has launched numerous businesses, acted as the CEO of a Publicly Traded US Company, and brings over 21 years of business experience to YFF. He has authored numerous articles, mentored hundreds in personal finance and wealth building, and spends at least 4 hours each day studying the global markets, drawing insight and conclusions from the flows of global commerce. As an Affiliate of Anglo Far East Bullion Company, Mr. Stanczyk specializes in teaching foundational principles of money, the gold market, and why gold has been a storehouse for wealth for thousands of years. |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.