Gold Continues to be Interesting…

Take a look at a few of the investment media and a few gold commentaries:

Bloomberg article, Gold Rises on Haven Demand Before Fed Meeting, Aid for Greece, says, “March 16 (Bloomberg) — Gold rose for a second day in New York as investors sought a haven before the U.S. Federal Reserve’s interest rate decision and amid speculation about financial aid to Greece.”

Interestingly, this gentleman, Sol Palha, in his commentary, Is Gold Starting to Trade Like a Currency?, disagrees with a similar Bloomberg article on March 8. He claims, “One almost wants to laugh at the reasoning behind this story. In the past, the main reason for Gold’s upward or downward move was always related to the dollar, but not because a small country like Greece was in trouble. We propose an alternative theory. The fact that the Euro and the dollar were at one point trading higher in tandem suggests that Gold is now being treated as a currency. Traders normally jump from one currency to another as they try to determine which ones are overvalued and which ones are undervalued. This is normal in currencies; we see this almost on a daily basis in the Yen, US dollar, Australian dollar, etc.”

Though they don’t make the quite same claim as Mr. Palha, article, Gold Prices Lift on Dollar Drop, states, “Investors were buying gold as an alternative investment as they sought the safety of a hard asset over struggling currencies.” In addition, they quote James Moore of as saying, “Given the scale of background concerns, including EU debt, fiscal deficits, U.S. credit ratings and inflation sentiment … the precious metals complex seems set to remain volatile.”

In his article, Is a Major Correction to the Gold Price Coming?, Julian D.W. Phillips concludes, “In such an environment of uncertainty and doubts about the future, it is unlikely that there will be a great exit from gold. It is far more likely that gold will remain attractive as long as the world is in the present state.” He drew that conclusion in part from the following:

>>Investment demand increases from both past investors in gold and investors new to the yellow metal

>>The euro problems continue along with decreased confidence in the European Union’s ability to correct itself

>> Ditto on the dollar problems and our politicians’ lack of interest, attention and ability to fix them

>>Interestingly, there will be short term stability between the euro and dollar as they slide together on the lack of confidence slope

>>China experienced tremendous growth and internal strength, yet they have significant dependence on their exports which stresses their currency issues

>>Plus, India, who sat out the volatility of the last few months, has begun buying gold again.

Mr. Phillips goes on to say, “So the conditions which would support a major correction in the gold price are not present. Should a correction from a failed attack on recent highs occur in such an environment it is likely to be a short one.”

Of course, you need to draw your own conclusions, but gold continues to be an interesting focus.