Despite a variety of reasons why gold prices should have surged higher, gold failed to really take off during the financial turbulence in late 2008. But recent clues suggest the market may be heating up again.

  • Stocks, property, commodities, interest rate instruments and almost every other area aren’t giving investors much of a return in U.S. dollar terms.
  • The economy keeps coming up with bad news about job losses, housing, fund schemes and scams and other economic conditions, maintaining gold’s status as a possible flight-to-quality investment.
  • With the amount of dollars the government is giving banks and companies and talk of stimulus payments, many believe it is a foregone conclusion that inflation rates will have to rise sharply, lifting the price of gold and all commodities.
  • VantagePoint indicators are providing several positive clues currently with a predicted medium-term moving average crossover to the upside a week ago and the neural index at 1.00.
  • The Streettracks Gold Trust exchange-traded fund (GLD) rallied sharply when the financial frenzy hit markets last September, then fell back as VantagePoint flashed sell indications. If GLD can get above last October’s high of 92 (red dashed line), it could be off and running to the highs above 100 (equivalent of $1,000 an ounce gold). But in a cash-is-king environment, that level could also be the barrier that turns gold prices down again.

Source: VantagePoint Intermarket Analysis Software

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