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Blanchard analysts say gold will continue to set new highs after achieving $1,049.50 mark
NEW ORLEANS (October 7, 2009) – The investment world has seen the price of gold achieve a new record high of $1,049.50 earlier today, and analysts at Blanchard and Company say the current upward trend is sustainable and will continue long-term.
"The current rise in the price of gold and its projected sustainability can be attributed to the decline of the U.S. dollar and mounting pressure from the continuing rumble for it to cease being the currency of choice for oil trading," says Donald W. Doyle, Chairman and CEO of Blanchard and Company, Inc. "Whether or not that will happen remains to be seen. However, it does show how fragile the dollar is right now."
The British news organization, The Independent, reported that:
"Gulf Arab (states) are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, and GOLD…"
Doyle noted that big upward moves in the price of gold – such as the one the market is witnessing recently – historically have precipitated profit taking that have in turn caused price declines, but he does not necessarily see that happening in the current economic atmosphere.
"In this market, the price moves have brought in new investors," Doyle says. "These investors are looking at the potential long term challenges of the dollar and are aligning their portfolios accordingly."
Doyle says he thinks many investors were waiting for the gold market to have a higher record daily close prior to entering the market, and investor demand for physical gold has been robust at his investment firm.
"Right now, there is little or no inflation within the U.S. economy, yet gold is hitting new highs," Doyle says. "Imagine what will happen when the velocity of money increases and all the dollars printed by the Fed make it into the overall economy – gold will push higher and higher."
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Copyright © 2009 Blanchard and Company, Inc.
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