Gold is trading near $1,060 an ounce today as oil reached a new high for the year, U.S. government debt reaches record levels and confirmation that the Federal Reserve is planning to keep interest rates near zero percent for some time.

The dollar has fallen to a 14-month low on the dollar index.  Central banks around the world are reducing their exposure to the U.S. dollar because of the lack of performance and diversifying into other currencies such as the euro.

Gold bullion has risen over 20% this year alone and this trend should continue.  Currently there is virtually no inflation in the U.S. economy, however the amount of money that has been printed will likely cause high inflation and now is the time investors should start preparing their portfolios.  Gold offers protection and a way to build and maintain wealth during periods of inflation.  

Any correction in gold going forward should prove short-lived.  The only problem that gold could face would be a strengthening U.S. dollar, which is not likely to occur any time soon.

Investors should be reluctant to take profits on their precious metals positions and even add to them should the price dip back towards $1,000.  Our target for gold remains to be around the $1,200 range by year-end and Blanchard continues to advise its clients to allocate roughly 15-20% of their overall investment portfolios towards precious metals.  

Posted by Blanchard and Company, Inc.