Investors unconfident about the success of bailout packages for Greece and Ireland are redirecting their interests toward precious metals to hedge the insecurity, Bloomberg reports.
Silver prices increased 2.4 percent on Wednesday after having shot up 15 percent last month, the largest increase since May 2009. Gold reached record prices in euros and analysts predicted its value will continue rising next year and in 2012. Goldman Sachs predicts the precious metal's price will rise to $1,750 in 2012.
"Gold is swiftly becoming the next reservable currency," Dennis Gartman, an economist and editor of the Suffolk, Virginia Gartman Letter, told Bloomberg.
Expenses for insuring bonds for Italy, Spain and Portugal also are rising very rapidly as Europe's debt-laden banks navigate through methods of halting the crisis spreading from one country to the next. When Greece accepted a bailout in June, the price of gold went up.
Gold's price also went up as Ireland wrestled with a bailout package early last month.
A report by Anne-Laure, Tremblay, a London-based analyst at BNP Paribas SA, predicted gold's price will reach $1,500 per troy ounce in 2011 and $1,600 per troy ounce in 2012.
Risk Disclosure
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.
