The 2011 gold price upward trend is obvious, you don’t have to be a market expert to see it from the charts.
Rising above $1,900 an ounce took many seasoned gold traders by surprise, and now everybody begins to talk about the “gold bubble.”
Although the gold market still keeps advancing, the opportunities for a quick profit are diminishing by the day. Right now every trader worth his salary ( and bonuses) knows that to a large extent, the current gold price is due to U.S. Federal Reserve printing money as there was no tomorrow.
Analysts say that the gold price bubbly rise from $1,500 to $1,830 can be explained by the market’s fears that Bernanke will announce new Money Print action, possibly #3…
Gold Price 2011
But, what is going to happen if Bernanke doesn’t start the printing press? Of course, the status of gold as the insurance against the fiscal irresponsibility would have to diminish. However, in the end, it’ll still be a win for the gold price. Why? Because non-action by the Fed will just expedite the collapse of the banking system. Good outcome for the purists!
However, that won’t happen overnight. Speculations coming from the well-informed Wall St. corners are that the lack of a money-printing announcement this weekend could see the gold price lose $80 – $100 or thereabouts in a few short days.
Who will benefit when the price of gold falls? Certainly not leveraged gold buyers. The sort of traders who do all their gold investing through the futures market or using CFDs, with some analysts indicating that they have about a 35% share of the gold transactions in the current month.
Still, gold is not going to fade away from the headlines. The damage done to the world financial systems in 2008 and lately the Euro and American ratings crises of 2011 are serious and fresh in the memories of investors.
That’s why gold should be seen as an insurance policy. So far it’s working well. And unless some sanity comes back to the market, instigated by the sound fiscal policies of the governments of all leading economies, and federal bankers all over the world take their hands away from the steering wheel, nothing will change – gold will be the safe harbor for those who see cash deposits as a thrill-depraved, staid asset.
Important addition:
If you’d rather stay away from gold trading, consider silver as the investors’ metal. In this video, Dr Alex Cowie explains why:
