Thursday, August 21, 2008

Gold Speculators Rush In?

From a pure technical perspective, the parabolic rise in gold may be partially due to the flood of speculators into the commodity. This may not be too dissimilar to the recent spike in oil and oil futures trading.

The August 21st article in The Wall Street Journal titled, The Eagle Has Been Grounded ($), notes the U.S. Mint stopped selling the American Eagle gold coin because the mints inventories have been depleted. The Journal noted:
"Due to the unprecedented demand...our inventories have been depleted," the Mint -- part of the U.S. Treasury Department -- told its dealers Friday. "We are therefore temporarily suspending all sales of these coins."... The Mint has sold 311,000 ounces of gold coins this year which is about 50% more than was sold in 2007.
Gold chart 1975 to 2008
When the speculators head for the exit, one could see a rapid decline in the price of gold.


The Eagle Has Been Grounded ($)
The Wall Street Journal
By: Ianthe Jeanne Dugan
August 21, 2008

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