Gold is up 6% so far this year. The WSJ had an interesting article today (p. C-4) that the Chinese have really ramped up their gold buying. Part of that is for gifits for Chines New Year, due Jan 23. But, the simplicity of gold is appealing to them. Third, inflation in China is down to 4.4% but that’s still enough to make people think of buying a seeming store of value.
Now, throw in the news that the Fed is thinking about doing QE3 and you have four (soon to be 3) reasons to buy gold. Most likely QE3 only would come about if Europe deteriorates.
Last summer gold reached $1,900 per ounce. It fell to about $1,520 in December and is up to $1,610 today. I may start buying GLD and CEF again shortly after taking profits last year.
Note: only in the last couple years have I been bullish on gold. For most of my career I have shunned it. While it is up a lot since its low in 2000 I think it has much farther to go.