As Gold Keeps Going Up...

...predictions of new all-time highs are beginning to surface again. One from Byron Wein calls for $1,500 gold sometime this year. Another, from Macquarie Capital Management, points to the fact that the doves are in charge at the Fed; rates won't be going up anytime soon. In fact, the real T-bill rate is negative.

Macquarie Capital Markets’ research team put out a note on this topic yesterday, alerting clients to the fact that “Near zero short rates suggest real short rates will remain negative, which has historically been very bullish for gold (bullion historically has risen at a rate of >20%/yr when real T-bill rates are negative).” The Canadian-based investment bank reiterated their bullish position on the gold price and the shares of gold mining producers, highlighting the dramatic shift in sentiment that has occurred over the past few months. Noting that “bullish sentiment towards the dollar hit its highest level since 1997,” Macquarie called for the euro to strengthen and the gold price to move higher in concert with a lower U.S. dollar.

That last point, about bullish sentiment on the U.S. dollar making for a good contrarian call, has been timely. The U.S. Dollar Index hasn't been able to stay above 81.5 today.