Since our last issue, gold has resurrected itself and risen over 20% from its twenty-year low recorded this past summer. The big question from our clients has been: “Is gold going to go up any higher?”
While nobody can answer that with any high degree of certainty, I think it is worth noting the following: Over the past months there has been a huge rise in gold interest rates, or the gold lease rate. These rates have generally been in the 1% area or less. However, they have risen significantly since July, going as high as 5%, and seem to have found a steady level of around 4%. I believe these rising rates are linked directly to the worldwide increases in demand and possible demand from bullion banks trying to cover possible gold loan defaults. I am not known to be a gold bug. However, the fundamentals surrounding gold contain many variables which seem to support the current price. I do believe we have seen this year’s low, but that a $290 – $310 trading range has to be confirmed before it can go higher