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Gold Tops $1675 Follow Fed Chair Comments on QE3

Release Date: 
Friday, August 31, 2012

Gold and silver prices saw significant gains on the New York Spot Market during morning trading following Federal Reserve Chairman Bernanke’s speech promising Fed action to spur the economy. As of 9:20 a.m. Pacific Time, gold prices were up $19.90 to $1676.20 on the New York Spot Market. Silver gained 2.23%, trading at $31.22, a gain of $0.68. (Click here for the most current spot prices.)

"Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," Mr. Bernanke explained at the conclusion of the Kansas City Fed's annual Jackson Hole symposium. 

MarketWatch reported that “A possible third round of asset-buying would be positive for gold, which thrives on concerns about currency debasement.”

"I think the macro situation doesn't seem to be improving and also we are getting closer to the fiscal cliff for the U.S.," said Phillip Futures analyst Lynette Tan, referring to U.S. government spending cuts and tax increases that will automatically begin in 2013 unless Congress intervenes.

"I expect gold investors to have this in mind, and their interest in gold as an alternative investment will still hold.”

CNBC “Mad Money” host Jim Cramer recently discussed components of a diversified portfolio, which included an allocation in gold. “You need some gold, because gold has a special property…one that makes this metal precious to any diversified portfolio. Gold tends to go up when everything else goes down.”

“Consider it your insurance against economic or geopolitical chaos. Consider it your insurance against uncertainty and inflation…all things that cause most stocks to decline, or also cause the price of gold to rise,” Cramer said. “It’s also been about the best performing asset year after year for the last decade, racking up gains consistently over a period where at some point, every other asset class has truly disappointed you.”

(Sources: “Bernanke says Fed to act as needed but mindful of risks,” Reuters, August 31, 2012; “Gold holds to gains after Bernanke speech,” MarketWatch, August 31, 2012.)   “Gold, A Stock Insurance?,” CNBC, August 29, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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