Gold and silver prices posted very strong finishes to the end of last week, and look like they could at long last be at the start of a significant trending move higher. Gold gained 3.46% over the week, with silver recording an impressive 8.98% weekly gain. The white metal has broken above an important resistance level at $30, and judging from the price action this morning looks like it could launch a quick assault on $32.50 – a level that marked stubborn resistance for much of the first half of this year.
Over at KingWorldNews, commodity guru Dan Norcini notes the rash of short covering that took place in the silver market last week. He points to $35-$35.50 as the last “line in the sand” for these speculative shorts, and thinks that we could see a huge new influx of money on the long side of the market if this price level is bested. $40 will then be in play again.
The story is similar in gold. If the yellow metal rises above $1,700, we can expect to see speculators dashing to cover their short positions. Aside from the increasing likelihood that the Federal Reserve is getting ready to launch another money printing scheme within the next few weeks, gold bugs have also been encouraged by chatter about the Republican National Convention (due to meet in Tampa this week, barring problems with hurricanes) including a plank in the convention platform calling for a “gold commission” to study the feasibility of relinking the US dollar to gold.
Of course, a similar congressional commission was convened in the early 1980s, and to nobody’s great surprise endorsed the (non gold standard) status quo. Given the restraints that a genuine gold-dollar link would impose on federal spending, it is in fact almost inconceivable to imagine Washington voluntarily agreeing to return to a gold standard. But even accounting for these caveats and the fact that this latest idea probably owes more to Romney-Ryan trying to secure votes from Ron Paul supporters (many of whom will be tempted to stay at home on election day), it is at least encouraging to see gold once again becoming a mainstream discussion point.
Less encouraging are the continuing misconceptions fostered by lazy and/or ignorant journalists about gold’s use as money. But that’s a discussion for another article.
