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June 18, 2010 – 4:59 pm

This morning gold pushed above its recent highs. It has been moving up with the stronger dollar over the last couple months and continued up with this week’s weaker dollar. That tells you that fear is still very prevalent. Traditionally gold prices rise when there is a lot of fear, inflation or large scale war. We have no inflation and no war so it is fear that is pushing it up. Recently, demand from Asia is another factor affecting gold prices.

The reason fear is elevated is not a mystery. Europe is the primary culprit though things are starting to calm down. Also, the Gulf oil spill with its related issues and the continuing uncertainty of the financial reform package is weighing on investors’ minds.

The stock market despises uncertainty. That uncertainty produces or at least feeds the fear. Maybe next month’s earnings season, as it gains traction, will have a calming effect and gold will start to soften, but that might be only a short term event.

Good Trading
Steve Peasley

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