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Gold has been surging this week, hitting a record high of $1235.20 an ounce Tuesday. It’s the highest levels since gold hit a peak of $1226 in December 2009. But this should come as no surprise. We’ve been calling this move for months now and our readers are well aware of gold’s bull-run. Gold has been surging this week, hitting a record high of $1235.20 an ounce Tuesday. It’s the highest levels since gold hit a peak of $1226 in December 2009.But this should come as no surprise. We’ve been calling this move for months now and our readers are well aware of gold’s bull-run. But what’s triggered this hard and fast rush into bullion that set this new record? It’s a combination of safe-haven buying, bullish technicals, and increased interest from the general investing arena. PIGS Debt First, there is growing concern over the Greek debt crisis as well as the financial troubles in other “PIGS” nations such as Portugal, Italy, and Spain. Yes, austerity measures have been implemented. And the EU, IMF, and European Central Bank recently announced a $1 trillion bailout package to mitigate disaster. But skepticism is rampant as to whether or not these measures will work... whether they’ll be enough... and what the lasting effects will be. The uncertainty is causing investors to flee paper currencies into the safety of gold. Solid Technicals According to Barclay’s Capital, “the technical trend also looks strong – our technical strategists note that they would expect steady gains initially only to the $1,240/50 area, and beyond that the next meaningful target is around $1,350/74.” Standard Chartered research also said with the break above the all time high in spot gold, the next target is the psychological level of $1,300. But here’s something to keep in mind though. Gold has divorced itself from the inverse relationship to the dollar – that gold goes down when the dollar goes up. So even in the face of the U.S.’s nagging debt problems and exploding money supply, U.S. Treasuries and the greenback are gaining from this flight-to-quality move. Rabid Investors The rush into physical bullion like bars and coins has gold sales at mint stores is shooting through the roof. Muenze Oesterreich AG, the Austrian mint that makes the best-selling gold coin in Europe and Japan, said sales jumped in recent weeks on concern that Greece’s fiscal crisis will hurt the euro. There’s also been strong trading volume in gold ETFs and gold futures trading as well. Investors are quickly realizing that this trend is picking up steam. “All we can do is to put our money into real assets, because paper money everywhere is being debased,” said legendary investor Jim Rogers. Still A Long Way To Go Although we’ve seen gold set a new record, there’s still a very long way to go. A true record for inflation adjusted prices would be somewhere in the $2300 range as set in the 1980’s record $875 per ounce. Euro Pacific Capital President and Chief Global Strategist Peter Schiff believes that the price of gold will go upwards of $1500 - $2000 by the end of the year, “It is amazing to me that gold is still so cheap. Considering all the money that has been printed, and all the money that’s going to be printed.” James DiGeorgia, the publisher of GoldandEnergyAdvisor.com calls for gold to go as high as $1500 an ounce this year as well, “Clearly, gold has become the only reserve currency not backed by debt.” I’ve predicted that gold will trade in the $1400 range by the end of the year. Nevertheless, it’s now easy to see that there’s finally been a shift in investor psychology. To the regular people, gold is no longer a relic. It’s finally getting back to being a monetary asset. And that’s the way it should be. Yours in profits,
Roger Gaines
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