Why is gold making a new high, trading at $1,118.00 per ounce?

Filed under: International markets, Market matters, Money and Finance Today, Commodities, Federal Reserve

A wise trader once told me: "It's all in the price. All the thoughts, ideas and emotions of all the traders throughout the world are in that one number."

Gold is trading at $1,118.00 per ounce. What is that number telling us? Pure and simple, the market is telling us that inflation is on the way. The Indian government just bought 200 tons of gold valued at over $7 trillion dollars. In other words they exchanged $7 trillion US dollars for the 200 tons of gold.

At the same time the December US dollar contract traded below 75.00 on a trade-weighted basis. What is that number telling us? Traders are turning in dollars for other investments, mainly stocks and commodities.

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Why is gold making a new high, trading at $1,118.00 per ounce? originally appeared on BloggingStocks on Wed, 11 Nov 2009 18:30:00 EST. Please see our terms for use of feeds.

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