"Yes, gold looks that bullish," says James Turk in his latest issue of the Freemarket Gold & Money Report.
Source: The Gold Report 06/06/2005(www.theaureport.com) -->
"Yes, gold looks that bullish," says James Turk in his latest issue of the Freemarket Gold & Money Report. Turk believes the yellow metal will hit the $500 mark in early October.
Gold hit a 17-year high last week, closing at US$457.20 on September 16. Despite continued strength in the U.S. Dollar, despite the Fed's decision to hike interest rates, gold has been on a roll since August 30, when it closed at $431.20. On 11 of the 12 trading days between August 30 and September 16, gold closed higher than the day before, including an impressive stretch of closing higher eight days in a row.
"That type of performance is fairly rare," says Turk.
It's also unusual for gold to rise along with the dollar, says Richard Russell, author of Dow Theory Letters. "This is something that this generation has never seen before. A STRONG DOLLAR AND EVEN STRONGER GOLD! All with a background of the greatest spending and debt creating machine in the history of mankind."
What's driving Prices Higher?
The Haywood Mining Group's Metals & Mining Weekly attributed the recent gain, in part, to investor speculation that government spending on rebuilding after Hurricane Katrina will further add to inflationary pressures already spiked by high energy costs.
Adrian Day, author of Adrian Day's Global Analyst, also believes Katrina could push the U.S. economy into a stagflationary period., especially given President Bush's recent spending promises.
"In this environment, gold will perform well, as indeed it already is doing . . . ," says Day in his Sept. 20 newsletter. Day also cited analyst John Brimelow's comment that maybe what is happening in gold is rooted in a "widespread and significant decline in confidence in the "American polity, like the late 1960s and again in the latter half the 70s."
Demand, too, can't be overlooked as a factor. The World Gold Council recently reported that in the first half of this year, gold demand is 21% higher in tonnage and 29% higher in dollar terms over the same period in 2004. Gold supply meanwhile, is 14% greater this year than last.
Turk says to continue to expect higher gold prices over the next few weeks. "The important point . . . is that this gold rocket has just launched," he says.
As for gold stocks, they have well outperformed gold in recent weeks, with the XAU index of seniors up almost 20% this month to multi-year highs, according to Day, who says they are "no longer fundamentally inexpensive."
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