What Does Gold At $1000 Say?

Gold has had a very interesting week. It has mooched around $950 for the past 6 months, missing the commodity rally, but then not being hurt by the equity rally either.

Then suddenly this week it has gone on a tear and is now approaching the psychologically important $1000 an ounce mark. Gold normally trades in a relationship with the US dollar; strong dollar weak gold and vice versa. This relationship seems to have broken down this week. Why?

There are many theories about paper gold, china and central bank buying. Almost none of them assume a greater demand for gold in the market for practical use.

Are hedge funds and such like preparing of a market adjustment? If so, gold and cash would be the sensible places to put money whilst shorting the equity markets.

Alternatively, Gold is being set-up for a fall and is itself about to be corrected. With the world coming out of recession, this safe haven should be less attractive.

It is hard to know, but an interesting development. What are your hunches?

Subscribe by RSS Subscribe by Email