Right now, Gold and Silver are stuck in a range while the World waits on Europe and central banks to take action.
Gold is trading between 1,600 and 1,700, and Silver is hanging between 30 and 32.
An analyst that I read said that Gold could rise to 10,000 or more and ounce if a return to the Gold Standard becomes a real possibility.
The Gold Bugs and many investors would be happy to just see Gold break back through the Key resistance 1,700, and from my POV the long-term picture for the USD provides some validity to the 10,000 oz price mark.
Shayne an I believe that the recent strength in the USD is temporary because the USA has a huge debt crisis at home to deal with.
With the US total debt at all-time highs, and the spread between US GDP and total debt at all-time lows,
LTN estimates that US debt will officially surpass GDP in the next 10 days or so.
Considering this, the long-term picture in the USD is very questionable.
Several days ago we learned that bond manager Bill Gross made a large bet on QE-3 by building up his mortgage backed securities position.
Now, the US Federal Reserve governor Dan Tarullo is rattling the Greenback saying, I believe we should move back up toward the top of the list of options, the large-scale purchase of additional mortgage-backed securities.
Another large round of buying assets by expanding the US Fed's balance sheet will be called QE-3 by investors, and would be positive for Gold and Silver.
The prior 2 QE programs sent the USD lower and precious metals to new highs. Now, one day after Mr. Tarullo's speech, the DXY* is already feeling the effects of more QE gossip by reaching a record low against the Japanese yen.
The US Fed has its next meeting at the beginning of November, any more significant signs of additional easing would add more doubt to the USD IMO.
*The US Dollar index, also known as the DXY, is composed of a basket of currencies. It was created by JP Morgan in Y 1973, and has only been updated once. The heaviest weighting is given to the Euro at 57.6%. The next closest currency based on weight is the Japanese Yen at 13.6%. As word comes out of Europe relating to a debt crisis solution, the Euro changes course accordingly, and the USD swings in the opposite direction. Not only has this caused the DJIA to experience triple digit moves on a regular basis, but has also caused precious metals to fall off previous highs and remain range-bound. While the US has many of the same problems that plague Europe, investors view the USD as the safest option to run to for now.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.