Gold Prices Continue Upward March (GLD, IAU)
Last July, gold was trading at around $1,500/ounce. This morning the price is around $1,750/ounce. The price rise can be attributed to at least four factors, all of which have pushed up demand. First, gold’s status as a safe haven…
Last July, gold was trading at around $1,500/ounce. This morning the price is around $1,750/ounce. The price rise can be attributed to at least four factors, all of which have pushed up demand.
First, gold’s status as a safe haven when investors lose confidence in fiat currencies. Think Greece and the euro. Second, jewelry demand, particularly in Asia. Third, demand from the world’s central banks, like private investors also looking for a safe haven. Finally, demand from bullion ETFs like the SPDR Gold Trust (NYSE: GLD) and the iShares Gold Trust (NYSE: IAU), which offer access to the safe haven of gold to retail investors.
There’s little reason to believe that any of these four factors will suddenly disappear. The Greek debt deal may get solved, but then the EU will move on to Italy or Spain and the whole drama could begin again. Jewelry demand is reasonably steady and central banks aren’t going to stop buying gold because they have no reasonable substitute. The ETFs will respond to investor demand and that’s not going to drop either.
Gold hit $1,900/ounce last August, but most gold bugs think $1,880/ounce is the next breakout point. At the current rate of price appreciation, we could see that level by April.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
