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-- Posted Wednesday, 2 December 2009 | Digg This Article | | Source: GoldSeek.com
Gold sailed past the $1,200 mark for the first time this week without much ado. It is the favorite currency of choice as the dollar falls and the stock market rally continues. Yet gold prices move in steps of around $200 and that is what we have just seen: a decisive shift past $1,000 and then a $200 step up in a few months. Sheikh selling Perhaps that is why normally reliable source tells me one local UAE sheikh is currently negotiating a huge gold sale. Locking in profits after a big step up looks wise, although for a sale of this size a discount of around five per cent is apparently still necessary. Arabs are traders by nature but this still looks a questionable decision. For how much of a haircut is the gold price likely to take in a market setback? Dr. Marc Faber says gold will not fall below $1,000 again. Sell now at a discount and you might well find it difficult to buy in any quantity before the gold price bounces back. On the other hand, sheikhs also have advisers, and there is a very good case for taking a profit on gold at $1,200. First, this does look like a short-term spike as any chartist would confirm. Secondly, the global stock market rally is well overdue for a correction, and as last autumn demonstrated that would also involve a gold sell-off – indeed we saw this happen again only last Friday. Third, currency analysts all over the world are starting to talk about a dollar recovery as the upcoming ’surprise’ for 2010. Dollar strength would only come in a big market sell-off and flight to the perceived safe haven of the US dollar, and that would be initially gold negative. Sideways drift However, while a correction in the gold price is probably inevitable after its recent $200 step up, the precedent is actually then for a year or two moving sideways, not for some kind of a price collapse. Is this not more likely to be the fate of gold now? A sharp correction along with global financial markets, then a recovery and a drift sidewards until serious debt problems begin to emerge in the major economies? Then it would be a question of investors abandoning T-bonds for gold, and the price would rocket, and not by $200 this time but by a multiple to prices way beyond anything seen today. That is why I would stay in buy and hold, and not cash in now.
-- Posted Wednesday, 2 December 2009 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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Is The Sheikh Right To Sell As Gold Tops $1,200?
