, IncMarch 10, 2010 – While the current economic events suggest uncertainty, gold prices could continue to rise as investors see the metal as the safest haven for their wealth. After losing $14.00 to close at $1,109.20 in Wednesday’s US session, gold prices had moved up $1.50 to stand at $1,110.70 per ounce at 7:30 PM EST.
The United States is facing what looks to be impending inflation. As Bob Tonachio, CEO of Robert James & Associates, Inc says, “If money supply grows faster than the economy that will create inflation as it is impossible for the economy to grow anywhere near the vertical spike in the monetary base, inflation is coming.” Gold prices have historically moved up as inflation devalues the dollar.
The struggles in the European Union are adding to the optimism for gold prices. Jim Willie CB, a statistical analyst for the Golden Jackass says, “If Greece is expelled as in my forecast, the Euro will look trim, especially upon instant expectation of expulsion quickly of Italy and Spain. If Greece is rescued, then a new wave of profligate bond rescue will indeed occur. But the cloak of uncertainty will work to lift the defective Euro currency and lead to a short cover rally. Either way, the US dollar will resume its decline, the tail on the Euro dog.”
He continues, “My best sources indicate without any equivocation that German leaders will talk of solidarity, say all the right things, but offer no aid to Greece as it suffers the desired default and removal from the European Monetary Union that shares Euro currency usage. The end to German sponsored welfare has been planned and sealed.” Such a chain of events would likely send gold prices up as well.
With China vowing to carefully evaluate adding more gold to its holdings and uncertain economic conditions in the US and Europe, gold prices are likely to resume their climb.
Stewart Lawson
Senior Staff Writer - GoldPrice.net
