COMEX gold prices hit new record high over $1300 per ounce on USD weakness

Gold prices have broken the $1,300 an ounce ceiling for the first time (24 Sep 2010), although only briefly. Trading platform investors saw London prices for Gold reach $1,300.07 before falling back below that threshold. The latest rise has been spurred by caution over the global economy, as well as weakness in the US dollar, which fell 1% against the euro. The gold price has increased five-fold in the last 10 years, up from a low of $258 in 2000.

One man who lost his bet on gold is former Prime Minister Gordon Brown, who sold 400 tonnes of the UK's gold reserve as chancellor between 1999 and 2002, just before prices began a ten-year price rise. The World Gold Council's last report on the gold market predicted that continuing strong demand from jewellery buyers in the two fast-developing markets of India and China would help to keep the price high. Particularly bullish analysts predict that continued uncertainty over the state of the economy will prompt gold to rise as high as $2,000 an ounce by the end of the year.

- Back in Apr 2010 I remarked that the gold chart had been looking like some kind of damped spring, apparently building up energy over a period of 5 months as the COMEX gold futures prices went back and forth as the trading markets tried to sort out the ongoing debate over inflation vs deflation. And then for a while it looked like deflation was poised to make a comeback when it seemed that we might get a repeat of 2008, with economic indicators looking like they were rolling over, a shrinking M3 money supply, and Death Crosses Everywhere.

But with recent talk of QE2 aka Quantitive Easing Round 2 making the rounds, and the Fed lately jabbering about not having "enough inflation", it is now becoming a bit clearer which way things might go. And of course there is Japan, lighting the fuse to spark off the Currency Wars, now apparently in full swing. Contrarian commenters have long written about a currency crisis being the next stage in the roadmap and we could be rounding that lap right about now. Hence gold's decisive take-off, blasting right through old records in the $1200's and now bumping up against $1300.

What's next is anyone's guess, with various people talking about $1400 or $1500 targets by the end of the year. $2000 seems a bit far out - but you never know. Gold prices have had quite a run the past 2 months. For those of you looking to get in, a good piece of advice would be *NOT* to chase prices. You'll have your chance, but you'll have to be patient. Give it a few months. If you *have* to DO something, at least do a bit of dollar cost averaging. So here's hoping to see you on the other side of, say, $1500 gold. Have fun in the meantime.

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