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Conflicted On Gold Now

February 24, 2009

Gold is a partner to inflation, undertainty, and war! That gold would reach 1,000 to $1,500 an ounce has been the main premise of this web site for since 2002. But, gold has now touched the $1,000 mark on two occasions only to back off a day or two later. The first retracement in 2008 took gold down to $735 before coming back to $1,000 two days ago. Today as I write, gold is off $17 to the $977 level. Let me share my concerns at this point.

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I follow two adivsors and have for decades and they are now 2-2 on gold headed higher in the short term.

The UNCERTAINTY principle is now the key that’s holding gold up because everything else is losing money big time. The possibility of WAR is there; however, it has been lessened by an Obama presidency. Israel will have to go it alone if they want to take out the Iranian nukes. But, until Netanyahu stablizes his base, that’s not going to happen in soon. That leaves us with the INFLATION issue.

There is no doubt that we’re looking at rampant inflation sometime down the road; however, that could be 2 years away. In the meantime gold could retreat like it did last year back to around the $750 level. Or a “bubble psychology” could set in tied to a NEED for money or cash. The bottom line is that if things get worse (pretty good odds on that), people will need to liquidate anything and everything to sustain themselves.

If people panic and some already have, gold’s BUBBLE could prematurely break and we could see $500 gold before it turns around and heads to $1,500. So, it all depends upon WHEN one needs their money. :-)

The rally in gold above the $1,000 mark is “showing signs of fatigue,” wrote analysts at Action Economics. The action this week indicates “some leverage accounts and short-term players looking to book profits,” they told clients. That’s what I’m saying too!

Taking profits in gold NOW is a good thing. Taking losses later is a bad thing. Gold no longer has a clear path to $1,500 as I see it; thus, a word to the wise is sufficient.

Written by Ernie · Filed Under Gold News 

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