European sovereign-debt markets in chaos threatening the viability of the euro — budget deadlock in Congress — Ben Bernanke implying yet more monetary ease — and this evening Moody’s threatening a downgrade on U.S. debt … and gold goes to new highs? Duh! Many would say: How could it not?
HSBC’s ever-polite gold analyst James Steele ventured this evening: “The climate driving gold higher is similar to that of Q2 2010 when gold also jumped to then record highs, buoyed by the emergence of the Greek sovereign crisis and U.S. quantitative easing. Gold is reacting to a similarly bullish cocktail of factors, except that as policy makers appear to have more limited options now, conditions are more gold-bullish now than in 2010.”
Two veteran investment letters agree. Wednesday’s Aden Report commented: “With one crisis following another, it’s not surprising that gold didn’t stay down long. It again emerged as the world’s safe haven and the upside is wide open.”
Peter Brimelow – Market Watch, June 14, 2011