Yes, it was a shortened trading week due to the holidays and the volume was down, but even with those factors in the equation it was a big week for gold and next week looks to continue the upward trend.
Gold closed the week up an impressive $19.60 to $1,749.20 and silver was up $0.73 to $34.07 for a silver/gold ratio of 51.3.
When I suggested previously that any price point over $1,745 an ounce would be a good place to start some small sales if you need the cash for durable goods, I didn’t expect the price be there at the end of the trading day. I keep reminding myself not to put too much stock in trades that happen on low volume trading weeks, but the upward trend in gold prices is impressive even with that in mind.
Still, don’t be surprised if traders come back from the holiday weekend, laden with debt from holiday purchases, and want to lock in some profits next week. In the age of machine trading it’s easy to forget that there is still a very human element at work in the markets.
Regardless of what profit-taking that may happen early in the week, the overall trend for gold is higher. Despite occasional ups and downs, that trend has been more or less intact since 2001. The good news for gold and silver investors is the underlying drivers of the upward trend in precious metals are still solidly intact.
Not only is the Federal Reserve still pumping cash into the economy to the tune of $40 billion a month, diluting the value of our currency, the majority of central banks in industrialized countries are doing the exact same thing.
Along with the currency follies, central banks are continuing to add to their own gold supply. For the first 10 months of this year central banks have stayed on track to meet or exceed last year’s accumulation.
It is not a coincidence that the very organizations printing money like there’s no tomorrow are also the very ones turning some of that funny money into gold. They are hedging against the value of their own currency because they know the world is trapped in a race to the bottom on currency valuations.
So don’t take my word on the future of gold; take the word of the central banks of Brazil, Russia, Kazakhstan, South Korea and China.
Chris Poindexter, Senior Writer, National Gold Group, Inc