Wednesday, June 2, 2010

Three Factors Supporting Gold Move Upwards

As spelled out in a Seeking Alpha article by Kevin Grewal, those three factors are: continued financial troubles in the Eurozone; geopolitical turmoil between the Koreas and in the Middle East; and, a slowdown in mainland Chinese and Indian growth that heralds the end of tight-money policies in those regions.

Almost certainly, there are whispers about the European banks facing a U.S.-style capital-evaporation crisis because of the losses they might have to take due to sovereign debt issues falling in price. There's already a solid link in the public mind between European financial flare-ups and gold, so any such event is likely to prop gold up instead of knock it down. The latter was more the case in '08.

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