Gold, silver and goldmines

Daily chart of the SPDR Gold Trust ETF that follows the price of gold:
1) Resistance of $1200 was broken. Price is now at $1235
2) Gold is already 26% higher year-to-date
3) The parabolic rise of the past few days makes it very risky to buy gold now: a sudden and powerful decline could occur at anytime. I will wait a price pullback before considering an entry.

Such price increase reflects inflationary expectations further to European Central Bank's decision to purchase government bonds to try to solve the Greek crisis, future potential sovereign debt crisis in other countries of the EU, and in general decline of confidence in paper currencies

Not only private investors are amassing gold bullions, the central banks around the world also continue to buy gold: see article in the Businessweek of May 13.

Gold accounts for only 1.6% of the Chinese central bank $2.4 trillion reserves, which is a lot less than the percentage of reserves held at other central banks around the world. So expect to see an increase of gold reserves by China central bank in the years to come. Gold consumption in China may increase a lot within the next 10 years due to demand from investors and jewelry industry. Chinese consumers are high savers and are looking to gold to protect their wealth. See article of March 30 in The Independent.

Gold in various currencies:

The charts of the silver ETF (ticker: SLV) and the goldmines ETF (GDX) look similar to the gold ETF described above. However for GDX, the resistance has not been broken yet.