Gold futures smashed through previous highs to set a new record above $1,300 per troy ounce on Tuesday, validating goldbugs around the world but sending a worrying signal about the stability of the global economy.
Demand for gold and the rising price of futures typically indicates pessimism about the state of the markets; in particular, it reflects a lack of confidence in currencies.
While the dollar fell, Comex December gold futures climbed 10.5 points to $1,309.10 per troy ounce; futures for December 2011 rose to $1,318.60 per ounce.
"People are buying every dip in gold," Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois, told Bloomberg News. "The trend isn't going to change until interest rates rise."
Silver gained even more, with December silver jumping 27.4 cents to $21.745 per troy ounce; so far this year, the white metal has outperformed gold by about 10 percent. The last time silver was this expensive was 30 years ago, when the Hunt Brothers attempted to corner the markets using silver futures and options contracts; the price spiked to nearly $50 per ounce before crashing to earth.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.