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Why Gold Prices Are Rising Now

After watching some drastic one-day plunges this year for the yellow metal, investors are wondering why gold prices are rising now– could this be the start of a healthy, prolonged rebound?

On Monday, gold enjoyed its biggest one-day jump in more than a year. It hit a four-week high as gold finally broke through the $1,300 an ounce technical resistance level and finished above $1,335 an ounce.

Short-covering by technically-oriented traders and the perception that the Fed will continue QE for the foreseeable future are the short-term answers as to why gold had such a strong day, and why prices are rising now.

But there are solid fundamental reasons as to why gold should and will keep recovering in price in the months ahead.

One key reason was pointed out several times by Money Morning Global Resources Specialist Peter Krauth.

I’m talking about the growing divergence between the paper (futures, etc.) gold market and the actual market for physical gold – “market dislocation.”

Join the conversation. Click here to jump to comments…

  1. H.Craig Bradley | July 24, 2013


    I believe it is quite possible that Western Banks have very little physical gold left, or at least, much less than previously though. They have leased much of it out to other central bankers, probably to Asian and Eastern developing countries. Gold that is lease-out is no longer in the possession of U.S. BANKERS, but they still have it on their books as an asset anyway. Nobody does regular physical audits to see what they really have in their vaults. Its a ready-made environment for fraud, banker-style.

  2. H.Craig Bradley | July 24, 2013

    So What!

  3. roger hamilton | July 27, 2013

    HI what about silver as to china buying…. thanks

  4. Oscar Wilde | July 29, 2013

    I believe that your comments are fair.Western banks can not be trusted and have proven to be deceitful and corrupt.This is not an opinion it is a proven fact in many cases.I also believe that the strategy China is acting on is one of protecting their own interests against a possible default on debt payment by the U.S..This strategy has been to secure precious metals especially gold. As well as and oil producing entities. These and other moves made by China are for strategic purposes and also as a hedge against the possibility of debt repayment default by the U.S.government.That does not mean this scenario is going to play out (U.S. default). But what it does mean is that the U.S. government is walking a tight rope in strong winds.If the U.S.government continues quantitative easing the debt levels potentially could balloon out of control beyond the possible of repayment without throwing the economy into a crash mode.And if they ease too soon they will spook the economy and the stock markets into a crash style correction.Given the fact that public and municipal and state government debt levels are so high a dramatic rise in interest rates could cause Detroit type bankruptcies across the U.S. I am hopeful and optimistic that the recovery will come about .However it is far to early to say for sure what the outcome will be. One key miss step could derail everything and plunge the U.S.back into near depression mode.I do not believe that scenario will happen but i am aware that the possibility does exist.Banks are recovering however this is with smoke and mirrors many banks are deceitful about the hedge fund operations that they are involved in. Many banks have leased out a large portion of their physical gold supply. Yet this gold still remains on bank balance sheets as an asset even though they no longer own this gold. Many U.S. banks have balance sheets are inflated by assets that they no longer hold. (They are not properly regulated despite the new regulations proposed by the Obama government). Another concern that i have is that the U.S. governments reserve gold holdings are much lower than have been stated.I understand that there could be political reasons for this.However there is a major discrepancy between the stated holdings and the government figures. I am optimistic that we will get through this and i believe in the recovery. However i advise everyone to invest with with a sense of caution and do the research. There is always money to be made through quality research and prudent investments.
    Oscar Wilde

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