Gold Nearing $1,900...

Written By Brian Hicks

Posted August 22, 2011

Editor’s note: For a more updated report on trading gold by Wealth Daily’s editor Ian Cooper, click here…


Gold is just $12 away from $1,900…. and we still remain ultra-bullish, seeing no reason to exit any part of our gold positions mentioned in early August 2011.

  • SPDR Gold Shares (GLD) position is now up to $184, a 13% gain.

  • SPDR Gold Shares (GLD) January 2012 161 calls now trade at $26.50, a 203% gain

  • Yamana Gold Inc. (AUY) position is now up to $16, a 17% gain.

  • Newmont Mining Corporation (NEM) now trades at $63.55, a 13% gain.

  • New Gold Inc. (NGD) is trading at $13, a 17% gain.

  • Randgold Resources (GOLD) last traded at $114, a 24% gain.

And like we said, we see no reason to sell any of these positions. When gold reaches our target of $1,950, we’ll reassess that position. Taking gains now is too premature. Any break above $1,900 could tack on another 20% of upside to gold. And we’re not about to miss that potential.

Pure Asset Trader readers have been trading the above positions… and many more recently. In fact, the team just finished up their second 40-for-40 win streak in under three years.

What Isn’t Driving Gold Higher These Days?

All we heard at the beginning of the year was that a recovery would take us higher in the second half.

That ain’t happening.

There was no chance of a recovery to begin with, but people ate up the notion anyway — and sent the market 600 points higher on it.

Not only is there no recovery, there’s a European debt crisis. The U.S. economy is in the doghouse. Consumer spending just fell 0.2% in June on 0.1% estimates.

The ISM index for July came in at 50.9 on 54.9 estimates. And GDP isn’t looking too healthy… We’re mired in debt worries with an eventual downgrade. We could see QE3 sometime this year, maybe even this month.

Home prices have fallen to 2002 levels. Values in some parts of the country are down some 50% — and it’s getting worse.

Unemployment is worse with 14 million people out of work. Inflation is out of control. And there’s still a lack of access to credit.

If all that isn’t enough to send you to the safe havens of gold, I’m not sure what is…

Appetite for Diversification

It’s really no surprise banks are buying gold like it’s going out of style.

After South Korea bought 25 tons of the metal for the first time in 13 years, just to diversify from the dollar, it’s likely other central banks in that region will follow.

Buying gold not only helps countries protect their wealth; it’s the best way for them to prepare for a gold mania that could make the 1970s look like “child’s play,” says Franco-Nevada Chairman Pierre Lassonde.

“In 1980, the only players, or the dominant players, were the Americans. Today the dominant players are China and India; 58% of all the gold sold this year will be sold in these two countries. When we reach that mania phase… it will truly make your head spin.”

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