Bumpy Economy Could Mean $2,400 Gold
With a presidential election and the looming fiscal cliff, as well as QE3, the dollar isn't exactly the safe currency it usually is when the world gets dicey, so it's a great time to buy some gold and silver, write Pamela and Mary Anne Aden of The Aden Forecast.
There are some telltale signs that the latest rise in gold could turn into a whopping surge.
Gold’s rise since the summer is now matching the similar time period in prior bulls when the surging rises really began. Therefore, use weakness to buy new positions, and keep the positions you have.
Gold rises strongly when real interest rates are negative—that is, when rates are lower than the rate of inflation. With a couple of exceptions, real interest rates have been negative since the early 2000s. And this has helped fuel a strong rise in gold since then.
The Fed’s latest actions guarantee the conditions for gold will stay bullish in the years ahead. The Fed’s going to keep interest rates super low, and inflation will pick up. It’s already happening. And this alone will keep real interest rates negative, making gold more attractive than anything we’ve seen so far.
For now, our strategy is essentially the same. Keep the positions you have...and continue buying gold.
Gold and silver are up nicely since the summer lows. Silver and gold shares are up well over 30%. Gold is up about 16%, nearing the $1,800 level, while hitting another record high in euro terms in recent weeks.
When you consider that the current bull market has risen 660% compared to the 1970s bull of 2,300%, you could see what we mean.