Thursday, October 9, 2008

Gold Price Crosses Above S&P500

I wrote this here in January:

Tuesday, January 8, 2008

FT: Gold is the new global currency

The Financial Times editorial today claims :

Gold is the new global currency

The world’s major economies have experienced rapid money supply growth of 10 per cent plus per annum in recent years. The Fed remains the world’s biggest holder of gold, yet supplies of the metal are no longer growing annually. If gold is a finite currency, its value against not just the dollar, but sterling and the euro too, should rise.
I made a note of the gold price rise in several currencies in this post last week. I traded in gold during the big rise in the 70's and the climax in the early 1980's. The single most reliable sign of a short term top in gold was an article on the front page of the local newspaper ( The Dallas Morning News ) declaring gold makes new all time high. We are not there yet but, if you see mainstream non-financial news coverage of a new high in gold prepare for a sharp setback. The chart above is from Google Trends and does not indicate an explosion of interest in gold by the general searching public yet. I believe this trend has a good ways to go and would look for a lot of press attention when the market cracks $900, and enormous attention when it cracks $1000. Those will be times to expect a big correction. When the gold price crosses above the SP500 price will be another big news day.
Let's hope it stops soon.

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