Gold Surpasses 4-Decade High

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) August 18, 2011 --

Gold eked out a tenth straight gain on Friday, matching a record winning streak set four decades ago. Market analysts said that gold has refreshed records several times this month, as the market fears that the debt crisis in the EU could spread and intensify and that the debt woes in the U.S. will escalate, which encouraged investors to rush for gold as a hedge against uncertainty. The possibility of more stimuli being pumped into the U.S. economy also helped support the market, after the Federal Reserve said it may consider a third round of the so-called quantitative easing if the economy falters.

Earlier this month gold broke out from a 10-week long box or rectangular consolidation pattern to commence its next major upleg. Fundamentally this coincided with noises emanating from the US to the effect that it is recognized that there is no alternative but to continue with QE. Denials later in the day caused the broad stock market to lose much of its gains, but the fact is that there is no alternative to QE, except a global systemic economic implosion, and thus, there is no alternative to QE, although attempts may be made to disguise the extent of it. The setting is perfect for another gold boom cycle to kick in, perhaps pushing the yellow metal into a super cycle. There are several factors aiding gold's further push into higher price records, greater investment worth and long-term reign as a de facto currency.

Gold is also used to protect investment portfolios against inflation, which could be fuelled by excess liquidity. The Federal Reserve's $600 billion bond purchase programme that ended in June pumped large amounts of cash into the global financial system, much of which found its way to commodities sparking a sharp price rally. The euro fell against the dollar as investors worried that European bank stress tests may reveal things that could further sour sentiment towards the single currency. Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust and that of the largest silver-backed ETF, New York's iShares Silver Trust remained unchanged. Meanwhile, analysts at BNP Paribas predicted that silver could outperform gold once more towards the end of summer. One important catalyst could be flows into ETFs. Barclays noted in a research piece that silver ETFs appear to be catching favor again with a wider audience of ETF investors. Gold should rise to record highs above $1,800 an ounce in the next few months, based on technical charts. One analyst said that in theory, it could reach a shocking $5,000 an ounce should equity markets correct sharply.

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