Gold's Bull Market Due to Supply and Demand Economics
Source: Seeking Alpha, GoldCore (10/15/09)
"In the battle between the huge supply of government debt versus the small finite supply of gold, there can be only one winner. . ."
Gold is trading at $1.056.50/oz. In EUR and GBP terms, gold is trading at €706.82/oz and £655.25/oz respectively. Resistance currently lies at $1,064.10/oz and $1,070/oz with initial support at $1,048.60/oz and then $1,040.70/oz.
There continue to be very strong fundamentals driving the gold market. These fundamentals are driven by basic economics. There is a small finite supply of gold; while there is a very large and growing very significantly supply of government bonds as governments internationally print money and create public debt on a scale never seen before in history. In the battle between the huge supply of government debt versus the small finite supply of gold, there can be only one winner for the
foreseeable future. Until governments (western and the UK and US governments in particular) get their act monetary and fiscal acts together, gold will likely continue to rise in value and this is why the inflation adjusted high of $2,300/oz looks highly likely in the coming years.
The 1980 high was a speculative bubble (after rising 24 times or 2,300% in 9 years) but even if one looks at the average nominal price of gold in 1980 it was $600/oz or some $1,800/oz. This is an important consideration. Until interest rates rise to more reasonable and attractive levels to incentivize savers to hold cash and government bonds, the opportunity cost of holding gold remains nearly nil. This is leading to what is clearly a real bull market in gold - and a bear market in the dollar and other currencies.
Silver Looks Very Good Technically and Soon to Break the $21/oz Mark
Silver is currently trading at $17.74/oz, €11.88/oz and £11.01/oz. Silver’s resistance lies just above the $17.94/oz mark and support at $17.70/oz and $17.48/oz thereafter.
Platinum Group Metals
Platinum is trading at $1,350/oz and rhodium is trading at $1,750/oz. Palladium is currently trading at $328/oz.