GOLD

1,850 Dollars - gold has reached another record high and silver started another ascend above 40 dollars late last week. While seasonal pattern support new highs in late summer, the rise of gold has accelerated in recent weeks reflecting the extremely nervous innvestment climate. Political indecisiveness on one hand and a stock market which shows distinct signs of a double - or at least another major - top, taking into account the highs of late 2007, makes the immediate investment future an uncertain one.

Although not producing any interest on its capital precious metals are seen by an increasing number of investors as stable value. Unfortunately, the value of gold and silver is only relative as their value is quoted mainly in dollars. As we all know, the dollar is on a long term decline which could be seen as a crash.

Exuberance may be the right assessment when we look at today's gold price. Where this price movement will end is anybody's best guess. Considering that the decline of the stock market may have just begun there is ample of upside. On the other hand, the recent acceleration may be a first sign that major highs are in the making.

Last week we were again confronted with new crisis talk: Greece is not going to hit its own budgetary goals, world wide recession is an option during the next few months. Those are all ingredients for further risk aversion trades. At least gold and silver should profit from those news over the coming days. My best guess right now is a gold price test at or close to 2,000 and a retest of the recent silver high.

Have a nice trading week!
Gerhard