Tuesday, September 8, 2009

Gold Breaks Higher, US Dollar Breaks Lower

Gold rose to the highest price since March 2008, topping $1,000 an ounce, while silver climbed to a 13-month high as a weaker dollar and concern that inflation may accelerate boosted the appeal of precious metals. President Barack Obama has increased the nation’s marketable debt to an unprecedented $6.78 trillion as he borrows to spur the world’s largest economy. Goldman Sachs Group Inc. predicts that the U.S. will sell about $2.9 trillion of debt in the two years ending September 2010. The SPDR Gold Trust(GLD), the biggest ETF backed by the metal, reached an all-time high of 1,134.03 metric tons on June 1. The fund, which held 1,077.63 tons as of Sept. 4, has overtaken Switzerland as the world’s sixth-largest gold holding. Bullion held in ETF Securities Ltd.’s exchange-traded products gained 6,640 ounces to a record 8 million ounces (248.8 tons) yesterday, its Web site showed.Gold is rising fastest in dollar terms – since the dollar is falling relative to most other currencies. The dollar index is down almost 15% since last March as investors around the world continue to shun the U.S. dollar. I expect that President Obama will ask Americans to “save” more, on Wednesday night in his joint session before Congress. If the U.S. savings rate does not increase, the federal government’s massive budget deficit may not be able to be financed from foreign investors, especially BRIC (Brazil, Russia, India and China) countries and many Middle Eastern countries that are now shunning the U.S. dollar. As a result of those governments fleeing the dollar, this is the first year the U.S. has ever lost foreign capital.

Barrick Gold Corp., the world's biggest gold producer, said Tuesday it plans to eliminate all of its gold hedges and raise $3 billion in a share offering to help pay for the move. This could be seen as both bullish and bearish for gold...depending in what camp your in? ~link to story~
Below is a chart I posted back on 8/27 & today's break lower on the dollar signals that gold may go higher.

*click on chartz to expand image

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