Gold prices rallied Thursday and the dollar fell after Spain
released its 2013 budget and the U.S. reported pending-home sales
weakened in August.
Spot gold jumped $24.06 an ounce to $1,775.65.
SPDR Gold Shares (
), representing a 10th of an ounce minus expenses, gapped up
2.39, or 1%, to 172.2.
Gold bullion reached a nominal high of $850 an ounce in 1980,
which would translate to $2,500 in today's dollars. Tom
McClellan, editor of the McClellan Market Report, believes gold
will reach $2,900 an ounce if the Federal Reserve's current
quantitative easing program leads to inflation levels seen after
the Civil War, when the country printed money to finance that war
and post-war reconstruction.
Economic stimulus programs from the European Central Bank and
the Bank of Japan, on top of the Fed's, prompted Kenneth Heck to
recommend GLD as his top ETF buy for the fourth quarter.
"Other central banks may follow as growth slows in their
countries," said Heck, chief financial officer of Heck Capital
Advisors in Rhinelander, Wis.,with $375 million in assets.
"Foreign central banks and investors may look to diversify away
from the dollar, euro and yen and look for an alternative
In addition, seasonal demand for gold jewelry picks up in the
fourth quarter and first quarter. "There is continued demand for
gold from jewelry and as an inflation hedge, but we believe the
largest demand in the short term will continue to come as a
currency hedge," Heck added.
PowerShares DB U.S.
Dollar Index Bullish (
), a measure of the greenback against a batch of foreign
currencies, fell 0.3% to 21.82.
Market Vectors Gold Miners ETF (
), a basket of 31 global gold miners, rose 2% to 53.37. GDX
rallied 15.5% the past three months and 1.44% year to date vs.
12.22% and 14.25% for the MSCI World Index, according to
"The gold miners look like a great leveraged gold play,
benefiting as they do from a weak dollar," said Rick Vollaro,
chief investment strategist at Pinnacle Advisory Group in
Columbia, Md. with $1.2 billion in assets.
Spot silver rose 67 cents an ounce to $34.60.
IShares Silver Trust (
) jumped 2% to 33.59.
Silver Miners ETF (
) leapt 3% to 24.78.
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