How high gold can go in October and November now that gold prices have risen for 12 out of the past 14 days can be determined by evaluating how parabolic the gold chart looks but must be weighed against the fact that central banks have been continuously purchasing gold for reserves, and Barrick CEO Aaron Regent doesn’t foresee any signs of central bank gold purchasing abating.
David Rosenberg is among more than a handful of analysts who see gold easily touching $3,000/oz (I made the modest suggestion one year ago that we could easily see gold at $2000). By many recent measures, gold prices have still not hit their 1979-adjusted highs. For that to happen gold would have to enter the $10,000/oz. stratosphere. In other words, gold today is still severely undervalued (recognizing, of course, that gold is always valued in relation to things other than itself).
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In addition to all the traditional reasons for the attractiveness of gold as an investment, as a hedge, we have the recent flare-up of popular perceptions around a so-called “currency war” – mainly taking place between China and the U.S., or between the left and the right hand.
No matter how much the US devalues its own USD by issuing more notes and bonds, it can’t shake the yuan off its back, for as long as the yuan maintains some sort of peg to the dollar. This is why the US is bugging China. It’s completely out of their jurisdiction, of course, but they’re trying it anyway. You see, the lower the USD goes, the lower the yuan will go with it – relatively, of course. The peg means that the US is not in control of how weak their own currency can become against the yuan. That’s the real reason for the currency manipulation accusations (as I said before, to think that the US is not involved in its own brand of currency manipulation is to not be looking at things very closely).
And the latest in currency war developments: China now has an international credit ratings agency, Dagong, which became the first agency outside Washington to brand a measly “AA” rating on the US.
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Tags: Gold, Gold Rally
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