Gold News: This Country’s Fears Are Boosting the Precious Metal

international gold, gold earth
Written by Mike Hammer

Just when everyone was ready to give up on gold – that “ancient relic” — suddenly rebounded back above 1,200.  That’s right, gold popped back above $1200 USD per oz in early New York trading, and is presently cruising sideways above that mark.

gold chart, gold activity

Source: Kitco.com

The credit for this pop goes to Italy, which is trying to stave off heading down the same path as Greece.  During 10 minutes after news of Italy’s lack of progress in their credit woes, traders drove gold and silver prices back up above 1,200, which you can see in the chart above.

“Geopolitical uncertainty” is a phrase every trader needs to keep in mind.  The past 10 years have arguably been the most prosperous time in US market history, certainly in the past 50 years.  Even in the midst of the good times there is always a black swan that can appear and wreck the party.  Whether it’s runaway deficit spending, wars, or banks overextending themselves, traders and investors need to stay aware of pending threats to the good times.

This Gold Enthusiast doesn’t think that Italy will tank overnight; the EU has too much riding on it.  The old axiom that those in power will do whatever is necessary, to stay in power, applies here. The EU central bankers are making warning noises toward Italy as the country tries to sell bonds abroad to stay afloat.

It’s kinda funny actually because that was exactly the strategy the ECB used to float Greece.  Despite their current warning noises, we can expect the EU central bankers to “help” Italy find low-interest credit, probably strong-arming other members of the EU to buy (junk) Italian bank bonds. Or even go to more extremes…  But like what happened with Greece, eventually they will run out of other people’s money, and Italy will have a reckoning.

Or, if the ECB does “mutualize” debt as discussed in the previous article, the whole EU will have some very rough times.

But that will take some time yet.

Signed, The Gold Enthusiast

DISCLAIMER: The author owns no position in any mentioned security. The author is long a small amount of NUGT and JNUG, and has an even smaller covered call position in NUGT.  None of these positions are large enough to affect any market. Mostly the author is waiting for better signs that gold is indeed at its floor.

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated with a business degree, then worked with Macy's. After Macy's he spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined a well-known financial planning firm as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where he worked first for a small manufacturing consulting company, then a major university. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoken at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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