Gold: Now Demonstrating Trust in Obama

Source:

"Since the inauguration, investors poured $6 billion into gold purchases through GLD alone. This is an increase of 210 tonnes in gold holdings or 24% in less than a month."

Despite making loud headlines about stimulating the economy, the U.S. government has been unable to raise the level of optimism among the general public, while the stock market seemed to drop into a deep state of apathy.

Last week we received the long-awaited economic stimulus packet as well as the so-called plan for the rescue of the U.S. financial system. We have already voiced our skepticism regarding the structure of the stimulus and its potential effect on the economy.

The markets around the world have deteriorated in deep state of indifference to the first round of actions of the new U.S. government. Only gold is starting to demonstrate its trust in the Democratic majority. Since the inauguration, investors poured $6 billion into gold purchases through GLD alone. This is an increase of 210 tonnes in gold holdings or 24% in less than a month.

Huge investment demand around the world has put an end to a steep gold correction of the second half of 2008. Most intermediate and long term technical indicators for gold have turned decisively bullish. A test of new highs by gold is very probable this spring.

In sum, gold investors are starting to believe that the Obama Administration sees one way out of economic problems, which will for sure resurrect inflation.

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