Gold Prices $1300 soon as US Dollar reaches ‘Death Cross’
By Andrew Zarowny
On Tuesday, a leading gold bullion firm, GFMS Ltd announced that they see gold prices rising, perhaps hitting $1300 per ounce before the end of the year. Gold prices shot up over $23 that day reaching a new record high of $1,271, a 2% gain in one day. Today, gold prices are still climbing to over $1,275, setting a new record again!
Meanwhile, this past Friday, the U.S. dollar reached a ‘Death Cross’, signaling a potential major decline in value.
In the past ten years, the U.S. dollar has lost about 40% of it’s buying power while gold has tripled in value.
GFMS issued this optimistic forecast on gold as they conclude, as many economists do, that the sovereign debt issues of most of the world’s governments running up huge deficits will lead to continued ‘unusual uncertainty’ in financial markets.
Precious metals are often seen as a ‘flight to safety’. More and more people, institutions and even nations are stocking up their supplies of gold, silver and platinum.
As I have written before concerning the Hindenburg Omen, a technical indicator of a potential stock market crash, likewise the ‘Death Cross’ is another technical indicator of a major currency fluctuation.
When the trend lines of both the 50-day and 200-day moving averages of the value of the U.S. dollar intersect, we have a ‘Death Cross’ when the 50-day trend line dips below the 200-day line.
When the 50-day line intersects the 200-day moving average in a positive direction, then we have a ‘Golden Cross’.
But this past Friday, the U.S. dollar passed the ‘Death Cross’, as the value of the buck declines. Weak Treasury sales are a primary symptom.
The 30-year bond is so low it’s even had some negative interest sales, meaning that investors are literally being paid to buy the darn things!
The climate for government-back securities is becoming less friendly as nations, like the United States, continue to rack up massive deficits without any end in the runaway spending.
With the potential of a major decline in the dollar indicated by the ‘Death Cross’, gold is seen more favorably as a safe haven for investors.
This is why gold prices have been rising steadily throughout the Obama Depression. GFMS Ltd thinks gold prices will hit the $1,300 an ounce mark before the end of this year. The way the past few days have been going, it may reach that goal within the next week!
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