What’s Next for Gold After New All-Time Highs?

I am like a Proud Papa when talking about gold, because of my history of good calls with the yellow metal. Back in 2008 when I had just first begun making guest appearances on CNBC, I made a bold call to Mark Haines that gold could go to $1500/ounce.

At the end of 2010, we wrote polished our thesis for the gold trade going forward, and so far going forward it has played out largely according to plan.

We have seen inflation take hold a lot in China and signs it could soon accelerate at home. Problems have continued to recur in Europe with Greece avoiding disaster with a last-minute austerity package, and now Italy looking like the next of the PIIGS nations to need a massive rescue package. Spain is the other nation to run into more serious problems of late, and you just have to wonder how deep the EU and IMF can reach into their pockets when bigger dominoes start falling.

With the ongoing problems in Europe, fear has once again resurfaced a bit in this market and gold has returned as the safe haven of choice. The economic recovery in the US continues to move at a snail’s pace, especially in regards to the jobs and housing markets. The slow growth has now prompted Fed Chairman Ben Bernanke to at least start hinting at another possible round of quantitative easing, which would is highly inflationary. The markets and gold have surged over the past two days based on Big Ben’s testimony, and it’s not out of the question to see the kind of Fed front-running that we saw in the second half of 2010.

The issue that has yet to really rear its ugly head and grab the headlines are state budget crises. Given the nature of our political system, deep benefit cuts and unpopular austerity measures will be difficult to push through amid the jostling to control of Congress and the White House. Many touch choices will need to be made

When silver made a harsh correction earlier this year following a parabolic run, gold actually held in very well, and is now making new all-time highs. As we stated in the blog from last December, I expect the GLD to easily see $160 relatively soon as the factors align to drive it higher, and could see spot gold hitting 2,000 over the course of the next year.

Disclosure: No position

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About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

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