Gold Fever Needs Treatment...!
Sep 19, 2010 - Gold reached its all time high of US$1275.6 on 17 Sep 2010. There will not be any surprise of resetting this all time high in the next coming weeks. However based of curreny deflationary pressure and increasing US $value among other currencies, this gold fever needs immediate treatment, perhaps will start in a couple of weeks and definitely not months.
Before gold begins correction phase, it will make a vertical rise to confuse investors and make short sellers to cover their positions. Increasing Media talk on precious metals, people jumping to buy on gold even though stocks gold producers (Barrick Gold (ABX), Newmont Mining (NYSE:NEM), Goldcorp (GG) etc) producers are unable to make new high.
Increasing Indian Stock Market Value makes people in India to feel rich compared to prior year and may invest in physical gold may contribute somewhat to the increasing price in gold. However it would be considered as speculative buying.
Gold is up by 17% in USD this year. It was up by just 5.7% on 27 July 2010. It was up by more than 10% in less than two months. I expect this really to continue to shake out short sellers and this rally will be short lived.
I expect the gold price correction by about 25% from its new all time high. Currently gold fever needs treatment...