Monday, March 2, 2009

Today in Gold: Monday, March 2

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:

"A New Gilded Age"
Author: Peter Koven

Main Points: Cash4Gold CEO Jeff Aronson is interviewed to get his expert opinion on the recent gold trend. "People have been using their homes to subsidize their income through home equity loans. That game is over. So now people have to go inside their home and find things to subsidize their income, i. e., cash for gold." The reason for gold’s rise is that several factors came together in favor of the metal. The credit bubble burst, the stock market tumbled and governments are printing money to dig out of the hole. Ian Gordon, publisher of the Long Wave Analyst report, says that "Gold does very well in this environment because it's the money of last resort. It's the only money people trust."

Analysis: Aronson makes an excellent point here at explaining why Cash4Gold is so successful in this economy. Consumers are losing safe ways for a quick cash out. Due to the increase in the value of gold and the likelihood that consumers have some gold to sell, the need for such a company arises.

"Gold Price to stay high due to economic 'panic'"

Main Points: Peter Major, a South African analyst from Cadiz Corporate Solutions, expects gold prices to remain flat for the rest of the year. He also told Mining MX that "it shows the extent of the panic in the market for the gold price to be trading so high."

Analysis: Gold has slipped since topping out at a shade over $1,000 per ounce, but Major is one of many experts who expect gold to remain steady or rise in value as the economy continues to stumble and investors move to "safe havens."

"Plenty of Room for Gold Prices to Go Higher"
Author: Peter Cooper

Main Points: There has been some talk of a bubble "burst" as with oil in more recent times, but Peter Cooper does not see the warning signs. There is no spike in the price of gold, and in fact there has been a "gentle upward curve over the past decade." Cooper reiterates that a slumping stock market will only continue to increase the appeal.

Analysis: While it may be tempting to call the recent rise to $1,000 a spike (and then a sudden drop into the $950 range), the long term chart over the past decade is gradual. Oil was doubling and tripling in very short time, thus creating the perfect scenario for a crash.

"Gold Glitters in Troubled Times"
Author: Terry Savage

Main Points: Gold is considered safe because it protects against inflation and deflation. Savage also puts together the perfect storm of events that would make gold exponentially more valuable. Calling it a "doomsday scenario," if the US dollar comes under attack it could be forced to link it to gold – only at much higher prices. "Some are predicting a conversion price as high as $4,000 an ounce one day."

Analysis: Savage’s "doomsday scenario" is not likely to be realized anytime soon – if ever – but it’s yet more support for the upside of gold.

"Gold Prices Fall Further as Dow Drops Below 7,000"

Author: Sara Lepro

Main Points:
After hitting a high just over the $1,000 per ounce mark, gold fell for the sixth consecutive session on Monday. The problem, according to analyst Stephen Platt of Archer Financial Services, is that "gold is also a commodity that is used in jewelry, used in electronics," he said. "The demand from those sectors has been very poor. You're being torn by a couple crosscurrents and today I think the economic weakness is driving things."

This is an interesting perspective, but one that should be considered. On one hand, we are told that gold is a safe haven and will thrive in tough economic times. However, during these times people are less likely to buy jewelry or electronics, items that need gold to function. This would seem to be one vote for gold having spiked.

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