Monday, March 16, 2009

Today in Gold: Monday, March 16

Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:

"The Trends Favor Gold"
Author: Lawrence Roulston

Main Points: Roulston sites several factors that favor the long-term value of gold: 1) Safe haven investment in gold has created a physical shortage; 2) for the first time in almost thirty years, is looked upon favorably, yet the price is not yet indicative; historical refusal of international banks to sell their gold and thus limiting the market may soon change; gold mines are aging, closing, and thus limiting the supply.

Analysis: So what does this all mean? We'll let Roulston answer that: "There are many reasons to believe the gold price will go higher, perhaps a lot higher. But, not necessarily right away. In fact, gold has a nasty habit of dropping back after it makes a big move. Shareholders of [mining] companies that find new deposits will be richly rewarded."

"Gold prices clipped by early advance on Street"
Author: Associated Press

Main Points: Following Federal Reserve Chairman Ben Bernanke's comments that the recession may end in 2009, causing a surge on Wall Street generally, energy and agricultural futures specifically.

"Bernanke's words that the economy could improve by later this year were particularly reassuring to investors who have been sending the price of grains and other commodities down on the fear that demand for basic materials will wither as the recession deepens."

Gold, however, is different. The less comfortable investors are, the higher the price goes. Gold for April delivery fell $8.10 to $922 an ounce on Monday.

Analysis: The early gains on the market were overcome by a slight loss by the end of the day, but there wasn't enough concern to benefit gold. What is interesting is that the dollar weakened -- typically, gold and the dollar have had an inverse relationship.

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