We Apologize for Interrupting the Gold Rally, But…

by Robert Williams, Publisher
Tuesday, November 24, 2009

The fascination with gold of late is incredible. Now, I’m well aware of its abilities to hedge the risk of inflation and weakness in the dollar. But based on the demand-side dynamics we’re witnessing, you’d think the end of the world is coming.

Gold has surged 60% in the past 12 months, with no signs of letting up. The yellow metal – trading for about $1,164 an ounce – is establishing new highs on a near-daily basis.

You see, with the dollar in freefall, central banks and hedge funds have sought shelter in hard assets, particularly gold.That’s a big reason why the gold rally has been so remarkable.

But demand is coming – full throttle – from consumers, as well.

Here in the United States, sales of gold coins are up as much as 75%.

The UK’s state-owned Royal Mint told Bloomberg News that its production of gold coins quadrupled during the third quarter from the same period last year.

And Chinese consumer demand for gold rose 12% in the third quarter to a record high.

Gold is a global phenomenon. In fact, we’re so in love with the gold rally that I haven’t heard anyone mention the word “bubble.”

Haven’t we learned our lesson? Look at any recent bubble – dot-com, housing, Treasuries… When the average Joe thinks there’s an easy buck to be had, that’s a cue to take cover. Fast.

All I’m suggesting is that you stay informed.

As such, pay close attention to Karim’s article. Because he’s saying what others are not – that gold prices may be headed lower in the coming months.

And he’s not playing a hunch, either. His opinion is based on what prevailing option prices on gold shares are telling him.

Ahead of the tape,

Robert Williams