The Gold market during the past seven months has
truly been incredible. Flash back to mid-September 2007 and you will find Gold
trading in the $680.00 range, while six months later in mid-March ’08 it was trading
The Gold rally had been fueled, in part, by the apparently
never-ending stream of reports of the Mortgage/Credit Sector fiasco, higher
energy prices, poor jobless claims, and generally higher commodity prices
nearly across the board. The U.S Dollar has been getting crushed over the past
seven months despite efforts from the FOMC to stabilize the economy, which
perhaps may work itself into supporting the US Dollar.
If you like to trade volatile and choppy markets the Gold
market is your dream come true. It has certainly become a true World market
with the insertion of an ever growing middle class in
for investors during uncertain economic times. The rally over the past seven
months argues that it may be more practical to purchase more Gold to further
diversify a portfolio than to sell profitable Gold and metal positions to defend
positions in other market sectors such as an equity portfolio.
During the past month the Gold has sold off. In my opinion,
much of this selling pressure has been due to an overbought market, lack of new
buying momentum, and of course -profit taking. But in my opinion nothing has
really changed. High energy prices persist, in fact Crude oil is trading at all
time high levels. There is still a severe problem in the Mortgage, Housing, and
Credit sectors. So why is Crude oil trading at all time highs while gold is
trading under $900.00? Since they are both “anti Dollar” they should be running
In my opinion the FOMC is selling Gold to inject cash to
support the Dollar, and I still feel the U.S Dollar is being supported on a
very weak foundation. The past seven months have been incredible and in my
opinion the Gold rally is more than justified.
Futures trading involves substantial risk and is not
suitable for all investors.