Thursday, April 9, 2009

Today in Gold: Thursday, April 9

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:

"Gold falls as investors turn to stock market rally"
Author: The Associated Press

Main Points: The stock market rallied today, on the heels of the announcement that Wells Fargo expects to earn $3 Billion in the first quarter. As a result, riskier investments became more attractive, the dollar strengthened, and the appeal of a "safe haven" like gold diminished.

Gold had a modest drop of $2.60 to settle at $883.30.

"A sharp rise in stocks has weighed on demand for gold in recent weeks. Prices have fallen since early March when Wall Street began a rally that lifted major stock market indicators more than 20 percent in less than a month from 12-year lows."

Analysis: Not a good week for gold. After starting the week a shade under $900, gold finished the week down about $17. That said, other than Monday, when the price of gold fell $24.50, the investment was stable.

The appeal of gold in the coming weeks will come down to investor confidence in the stock market. If more positive stories like the Wells Fargo projection come out, the markets will surge; gold will falter. If we begin to see global economies move forward as a result of the recent G20 summit, gold will falter. However, investor confidence is fragile right now. While the markets are rallying, any new crack in the armor will benefit gold.

The markets will be closed tomorrow in recognition of Good Friday.

"Gold Prices may rise by 'thousands of dollars' in the long term"
Author: Goldbug

Main Points: The Aden Forecast, written by Mary Anne and Pamela Aden, boldly claim that the price of gold could rise "thousands of dollars" in the coming years, reaching as high as $5,800.

"Gold is the ultimate inflation hedge and there's no telling where it'll end up, at least well into the thousands of dollars in the years ahead, and maybe sooner."

The report goes on to say: "Remember, gold's peak in 1980 at $850 is now the equivalent of about $2,200 in today's dollars. Gold has not even approached that level yet. Once the dollar declines again and inflation kicks in, it'll be another story."

Analysis: Other reports dispute such aggressive projections, saying that the past -- particularly adjusted for inflation -- is a weak gauge for future expectations. More positive reports have come in the last few days, but an upside of $5,800 in the next "few" years (no definition of how many that is) seems a bit extreme -- barring, of course, a significantly worsening global economic disaster.

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