Gold is Still Rising, Passes 1300
Gold is still a buy according to Frank Holmes, CEO of US Global Investors, today. He notes that Gold and Silver are lagging other commodities when adjusting their 1980 prices for inflation. This is even with the incredible run Gold has had over the past two years, hitting a new high today. He prices Gold at $2,300 an ounce if properly adjusted to inflation.He feels that Gold could double over the next 5 years. Sounds like the opinion of many analyst at the end of the Dot Com Bubble right before the bubble burst.
But in the short term there does appear to be support for Gold. The falling dollar and other currencies world-wide as cheap money is provided to boost growth, cause commodities become more valuable. Emerging markets need commodities to expand and now have funds to purchase more items made with Gold. And European banks have stopped selling as much Gold as in the past.
The Federal Reserve is looking to keep interest rates super low between zero and 0.25 for a long period of time. This is the rate range since December of 2008 which has kept the US Dollar weak and therefore Gold in a rally.
There are two main ways to trade Gold for the casual trader. You can trade the ETF of the SPDR Gold Trust (GLD). This is a widely traded exchange traded fund that tries to match the price of gold bullion. The other common Gold trading vehicle is the Market Vectors Gold Miners ETF (GDX). This ETF follows the AMEX Gold Miners index and is more volatile than Gold itself.
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