Markets

Is Gold Rally Losing Steam or Building Pressure?

The great debate is on! Is the gold market a bull or a bear? To answer we must first settle on the issue of whether or not anything has changed over the last 3 years. Let's start with jobs. Are we adding or losing? Today, we learn Wall Street jobs are now on the chopping block. In a place where the bottom line is all that matters, the need for a higher one is about to supersede the need for employees. The contagion is spreading.

Reports suggest, Bank of America alone is considering the elimination of 40,000 jobs. In March of this year Wells Fargo announced its own intentions to cut jobs. Goldman Sachs, HSBC, Barclays have all followed suit with announcements of their own.

Last week jobless claims rose an unexpected 11,000. Although the official unemployment rate of 9.1% did not change, skepticism over economic recovery grows as the official numbers are believed to fall short of actual numbers. By failing to count those who are now deemed discouraged workers - someone whose unemployment benefits have expired - the data remains unreflective of the actual number of people out of work. That number is growing.

How about housing? Sorry, yesterday August housing starts came in down 5%. Other reports show a wave of foreclosures may be about to roll over banks with a potential loan loss of over $1 trillion. Some believe Bernanke is about to address this situation specifically by driving down interest rates even further. Is a 2% 30 year fixed rate mortgage in the offing? We'll see!

Finally, let's look at the markets over the last 3 years. The Dow - flat! The S&P - flat! NASDAQ - Up 18% with 15% of that increase coming in the last 30 days. Thank goodness for Apple and Google, up 25% and 15% respectively, over the last 3 months. Let's face it, the outlook for declining jobs does not bode well for the future profitability of the markets.

Finally, let's take a look at precious metals. Over the last 3 years gold has doubled and in just the last 12 months silver is up 80%. As gold has fallen from its recent high of $1923 an ounce, it's as though the whole world is in limbo waiting for the next sign that the bull market in metals is still intact. As I see it, the evidence is overwhelming that it is!

Nothing has changed except that the national debt is higher, deficits are growing, global defaults of some sort seem imminent and the future of the dollar as the world's reserve currency is in serious question. Meanwhile, back at the ranch, the call has gone out for a return to the gold standard. Steve Forbes, Congressman Ron Paul and China all seem to be beating the same drum. Yes, China is said to be amassing huge gold reserves in an effort to back its own currency and begin replacing the dollar as the world's reserve currency.

Gold price predictions are flying, with some of the most conservative calling for gold above $2000 by year-end. However, the entire world seems to be sitting on a debt time bomb. All eyes are on Europe as it struggles to free Greece from its shackles of cold hard debt. That situation is about to explode. You'll recall at the outset of the Greek crisis, and long before gold even surpassed $1500 an ounce, the Greeks were buying gold at an equivalent $1700 U.S. Dollars per ounce. The Greeks were panic gold buying months ago. It looks like they knew then what's about to happen now.

Clearly, the only way out of this global financial crisis is to keep printing money and inflate our way out of debt. The Fed seems headed in that direction. With Gold prices significantly off recents highs, now may be a great time to consider adding gold to your savings and retirement accounts. For the latest real time prices on bullion and all your favorite coins visit LearCapital.com today.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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