1,700 Ways To Say I Love You

If you loved gold at

you have to love it at $1,700 an ounce. This morning, gold crossed the $1,700 level and it looks as if there is no stopping the precious metal, after S&P downgraded U.S. debt amongst fiscal problems, and continued problems in Europe. Gold is a run away freight train at this point, and there is the potential that we could see $2,000 an ounce, and perhaps even $2,500 if Europe really blows up. This morning, Goldman Sachs raised its price target for gold to $1,860 an ounce by the end of the year, and J.P. Morgan said it could potentially hit $2,500 an ounce if a catastrophe happens. On Friday, S&P announced it had downgraded U.S. debt to AA+, from AAA. This is the first time in the country's history that our debt has been downgrade, and it does not look like we will be able to get it back anytime soon. The average country takes nine to eighteen years for it to be up upgraded, if it is upgraded at all. With the downgrade of U.S. debt, we are seeing money flow into gold and silver like never before. S&P asked for $4 trillion in cuts, it got $2.1 trillion and more fighting in Congress than any of us ever imagined. It was embarrassing to watch, and even more embarrassing to be an American. Gold is up over $40 an ounce as of the time of this writing, and it looks like this is a week for gold to explode to the upside if there ever was one. The economy is weakening, no doubt, due in large part to the devastation that happened in Japan. Automakers, semiconductor companies, and a host of other tech companies have all said they experienced a sharp slowdown as a result of the world's third largest economy contracting due to the earthquake and subsequent tsunami. As a result, we have seen economic numbers slow to a halt in the U.S., although the

was a bright spot in a sea full of red. This week we could see even more gains in gold, if the Federal Reserve announces or even mentions a third round of quantitative easing. Ever since the minutes from the June Federal Reserve meeting were released on July 12, gold, as well as silver have been jumping. If the Fed and Chairmen Ben Bernanke do decide to do additional easing, the U.S. dollar would continue to depreciate, triggering a flight to precious metals. This could potentially pave the way for $2,000 gold. There are still worries about Europe and Italy in particular. Italy is almost too big to save, and with over $2 trillion in debt, it could bring down the European Union as know it. Last night, the European Central Bank

it would be buying Spanish and Italian debt, but that did nothing to assuage fears. We may not see $2,500 gold tomorrow or next year, but if we see more easing and continued worries about defaults, the streets are not going to be paved with asphalt anymore. The streets will be paved with gold.

Traders who believe that gold is likely to continue to climb might want to consider the following trades:

Traders who believe that there will be a pullback and equities will move higher may consider alternate positions: