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Are we in the Midst of a New Gold Rally?

Commodities / Gold and Silver 2010 Mar 01, 2010 - 11:36 AM GMT

By: Miles_Banner

Commodities

George Soros, the man who made over $1bn by short-selling the sterling pound in 1992, has more than doubled his holding of gold over the past few weeks.


Soros has been investing heavily in the U.S. listed exchange traded fund, SPDR Gold Trust, he now owns over 6 million shares worth around $680 million.

Why is he investing in gold?

Here at the goldpricetoday we have long held the view that gold is a key player in the currency markets, and as such, its performance and future forecasts should be measured against world currencies. Recent events involving big currencies has led to the gold price gaining momentum.

Gold has been lingering around $1,100 to $1,200 for quite some time. What could cause a gold rally from here?

Weaker fiat currencies look to cause the next gold rally.

In Europe relations have worsened between Germany and Greece. Greece have been trudging up Germanys world war 2 Nazi plundering of Greek resources. Whilst the Germans are claiming the Greeks conned their way into the euro.

A likely rescue package may have been severely damaged by these rather crude confrontations.

With George Soros being at the centre of a hedge against the Euro and Spain, Portugal and Ireland all in the que for bailout money, the Euro looks to be severely tested in the coming year.

Moneyweek report “further falls for the euro are on the cards. Morgan Stanley sees it sliding to $1,28, from around $1,35 now, over the next few months.”

The UK is fairing no better, with a budget shortfall of almost 13% of GDP. They’re right up there with the Greeks and the Spaniards in terms of budget deficit.

Mervyn King the Bank of England governor stated last week that the Bank may need to resume its quantitative easing programme. The diluting of fiat currencies by printing money is never a good thing for the strength of the nations currency.

What about the Dollar?

The dollar has long been the safe play when markets are turbulent. Indeed we did see a short rally last week, as you can see from the graph above (up to the 19th Feb). But the overall impetus is on a downward trend for the Dollar.

This fact is supported by the Chinese hedging against the dollar of late, see last weeks article. And Ben Bernanke stating on Thursday that its unlikely that U.S. interest rates will rise anytime soon.

So could gold be set to surge?

Gold seems to be the safest option out there, with investors opting for security; the gold price is in an ideal position to capitalise on the fears and weaknesses of fiat currencies

Regards,

Digger Gold Price Today

P.S Digger writes a weekly email analysing the gold price and the gold industry. Visit Digger at Gold Price Today (http://goldpricetoday.co.uk).

© 2010 Copyright Gold Price Today - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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