FRANKFURT - Gold burst through $1,700 an ounce in Asia on Monday as investors dropped riskier assets and ran to the safety of the ancient currency.
Markets were sharply down in Asia in the first day of trading after Standard & Poor's downgraded the sovereign debt rating of the US to AA+ from AAA.
Jim Sinclair, known as Mr. Gold, wrote on his blog that the next target for gold is $1,764 with $1,784 being the gate to an entirely new phase.
Looking at a one year chart, gold has climbed from $1,197 an ounce to the new high reached today in Asia of over $1,715, a jump of approximately 43%.
Former Fed Chairman Alan Greenspan said on Sunday, "Considering the momentum in which the market went down over the last week, it is very unlikely, if history is any guide, that this isn't going to take a while to bottom out," on NBC's "Meet The Press" program.
If there is a further selloff in equities in Europe and the US later in the day, investors should expect gold to move even higher.
It might be time to batten down the hatches and buy gold, cigs and whiskey.
Depending on how you see it, there are a few ways to play gold and the dollar on Monday.
Traders who believe that gold will go higher might want to consider the following trades:
- Play gold by picking up SPDR Gold Shares (NYSE: GLD)
- Market Vectors Gold Miners ETF (NYSE: GDX), which seeks to replicate the price and yield performance of the NYSE Arca Gold Miners Index
- Market Vectors Junior Gold Miners ETF (NYSE: GDXJ), which seeks to replicate the Market Vectors Junior Gold Miners index
Traders who believe that gold will drop sharply after this spike may consider these alternate positions:
- PowerShares DB Gold Double Short ETN (NYSE: DZZ)
- ProShares UltraShort Gold (NYSE: GLL)
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
This article was originally published on Benzinga, and is republished here with permission.
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