Gold and other precious metals have been setting new records nearly every day the past few weeks. Predictions of $1300 gold before the end of the year have not only been reached but passed. Mid-day trading this morning had gold prices approaching $1400, peaking at $1387. Silver hit a 30-year at $24.78 per troy ounce. Yesterday, gold finished at $1370.50 on the New York Mercantile Exchange. Investors are buying any precious metal they can now as the Federal Reserve continues it’s policy of quantitative easing and signs of a currency war widen.

A shopkeeper shows gold bars after buying them from a customer in Bangkok's Chinatown October 14, 2010. Gold touched a record high in European trading while silver rallied to a fresh 30-year high on Thursday as a tumbling dollar gave a boost to commodity prices across the board, traders said. REUTERS/Sukree Sukplang (THAILAND - Tags: BUSINESS)

Goldman Sachs just updated it’s 12-month forecast for gold and predicts that the price of gold may hit $1650 a troy ounce soon. This is up from their previous forecast of $1365. Demand for gold, and now silver, is increasing steadily, particularly overseas. China and India have been buying precious metals by the boat load. With good reason, too. They no longer trust the U.S. dollar, which took another bath yesterday.

David Greely, an analyst for Goldman Sachs, explains the new forecast. “As discussed by our U.S. economists, models suggest that it might in fact take until 2015 or longer before a rate hike became appropriate”, referring to interest rate hikes by the Federal Reserve. Normally, the historic interest rate level hovers in the 5-7% range. Most of the past decade and a half has had interest rates in the 3-5% range.

Since the Crash of 2008, the Fed reduced interest rates to ZERO! Even now, it’s at 0.25%. Ben Bernanke is gearing up for inflation in order to launch ‘QE2′, a new round of quantitative easing involving the Fed buying assets like stocks and corporate bonds to shore up markets. The Fed is supposed to act to prevent inflation, or so ‘they’ say, but the realities are that the Fed causes it.

The United States federal government needs these rock-bottom interest rates so Obama may continue his massive spending programs, running up trillion dollar budget deficits from here to eternity. It’s no wonder that economists predict high unemployment rates and a stagnant GDP growth between now and 2015. Obama needs both to act out on his agenda.

So the flight to safety is well underway. Gold prices of $1400 a troy ounce are not a surprise. Nor is $1500 before the end of this year nor $1650 before next summer. Precious metals offer investors security from chaotic times. Every single precious metal, including silver and copper, have been steadily increasing in value with gold prices ending yesterday at $1370.50 on the New York Mercantile Exchange. The way things are going, gold could easily pass $2000 a troy ounce soon and be at $2500 by 2015.

A shopkeeper evaluates gold chains sold by a customer in Bangkok's Chinatown October 14, 2010. Gold touched a record high in European trading while silver rallied to a fresh 30-year high on Thursday as a tumbling dollar gave a boost to commodity prices across the board, traders said. REUTERS/Sukree Sukplang (THAILAND - Tags: BUSINESS)

A shopkeeper weighs gold chains sold by a customer in Bangkok's Chinatown October 14, 2010. Gold touched a record high in European trading while silver rallied to a fresh 30-year high on Thursday as a tumbling dollar gave a boost to commodity prices across the board, traders said. REUTERS/Sukree Sukplang (THAILAND - Tags: BUSINESS)

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