US Bond Sales shore up gold price and australian currency
May 31st, 2009 | by winsonlee |Oil is going up. Gold is going up. Even Australian dollar is going up as well. What is next ? Natural Gas, Silver or Uranium ? Gold went up 17.10 and close at $980.30. $1000 is a very strong resistant. Gold price break the 1000 resistant level in march 2008 but the price didnt stand there for long. In less then three days, gold price drop to $925. Some analyst actually mention that it is only worth while jumping into gold if gold price break the 1000 mark and hold on to that level for a period of time. Many rather pay an extra 10% premium knowing that gold is on the uptrend instead of holidng on to the metal not knowing which direction it is heading to. From the graph bellow, oil and australian currency is heading up as well. Gold and australian currency depends heavily on the Obama administration policy.
Last tuesday, $100bn bond is placed under the auction hammer. 10 Year yield bond is as high as 3.732 percent. US is creating paper to get more cash. The Obama administration needs to raise $2 trillian this year to cover the fiscal stimulus plan and the bank bail outs. $2 trillian may sounds alot. But it is just a number created by Obama administration to get their ass out from the mess. They can create 2 trillian today, what makes you think that they can’t creat 10 or 20 trillian tomorrow ? To them it is just a number. But to the rest of the world, the result of creating so much cash is devaluation of US currency. If US create another 8 triallian, this means that today’s US currency value is only 20% of what yesterday value is. If this is the case, do you think people or investor will still hold much of the US currency ? Gold is limited same goes to oil, silver or natural gas. Gold mining company can produce 2x of their current x production. But this also means that there will be lesser gold in the ground. We cant just plant gold from x amount to 2x amount on the ground so that we are able to get more out of it.
This actually shows that US action has shore up the gold and oil price.
