It is over-bought as often happens in bull markets and requires a correction but, consider this. It is the falling value of the dollar and other currencies driving gold up, not so much in value, but in price at the same time the “value” of the dollar falls even when rising against the Euro.
quote
BEIJING, Dec 17 (Reuters) – It is getting harder for governments to buy U.S. Treasuries because the United States’ shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said on Thursday.
The comments by Zhu Min, deputy governor of the People’s Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of U.S. government bonds.
snip——————–
Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.
http://www.reuters.com/article/idUSTOE5BG08U20091217
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Stop focusing on gold and its price and focus on the value of the dollar, Euro and other weak currencies that can fall a long way from here in value.
As that Chinese person says, “The United States cannot force foreign governments to increase their holdings of Treasuries,…… “Double the holdings? It is definitely impossible.”
The U.S. is digging the debt hole so deep that even its most ardent supporters will be unable to buy the debt we need to sell which is why you are seeing some changes in FED monetization policies but, now with Congress calling for Stimulus II to bail out states, we have more demand for rising debt, not less.
- JanPaul
