GoldMoney Alert - 6 September 2009

Coming Inevitably - $1,000 Gold

I concluded my last alert on August 10th with the following comment: "We may now be at one of the last buying opportunities before gold climbs above $1,000 and silver climbs above £10. A 4-digit dollar gold price and a double-digit Sterling silver price may be just around the corner." Gold in terms of US dollars and silver in British pounds closed that day at $945 and £8.70 respectively.

This past Friday gold closed at $994.90, rising 5.3% in less than a month. Silver closed in New York Friday at £9.92, a spectacular 13.9% rise, which is slightly higher than silver's 13.3% rise in terms of dollars during this period.

Importantly though, gold is still below $1,000 and silver is still below £10. Neither metal has broken out of its base and made new record highs - yet. So despite these spectacular gains, a 4-digit dollar gold price and a double-digit Sterling silver price are still around the corner. But we are now of course closer to that event than we were back in early August.

Last week's surge in prices is an indication of the buying power that has been building for months. Expect to see a series of similar weekly surges when gold finally climbs above $1,000 and silver climbs above £10.

The question on everyone's mind is, when will that be? And always, the answer is the same - no one knows because the future cannot be predicted.

While the timing of $1,000 gold and £10 silver is unknowable, one thing is certain. As long as the Federal Reserve and the US government take actions that debase the dollar, the dollar price of gold will rise. Similarly, as long as the Bank of England and the UK government take actions that debase the pound, the Sterling price of silver will rise. It is a certainty, just like night follows day.

Years from now we will look back at today's action with amazement at how low the price of gold and silver were, just like I can today look back to my college years when gold was only $35 and an ounce of silver could be had for 46 pence. It is a distant memory - and those prices will never again be seen. Eventually a three-digit dollar gold price and single-digit Sterling silver will never again be seen, as long as those currencies continue to be mismanaged and continue on the path to the fiat currency graveyard. And there is nothing in the following charts to suggest that those two currencies are about to reverse course (the dollar silver chart is included for comparison, and remember, GoldMoney provides charts for the precious metals against all the major currencies here.

As I noted in the last alert: "Both [precious metals] look ready for prices to soar much higher, probably by September or October at the latest." Those dates were of course just a guess, perhaps an educated one but a guess nonetheless. But there is no guesswork to conclude that the dollar and pound are being debased, and that in the absence of any policy advocating sound money in the US and the UK, inevitably gold will hurdle $1,000 and silver will clear £10.

Published by GoldMoney
Copyright © 2009. All rights reserved.
Edited by James Turk

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