Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Stagflation Fears Drive Gold to New All Time Highs

Commodities / Gold & Silver Feb 22, 2008 - 07:09 AM GMT

By: Mark_OByrne

Commodities Gold rose $11.10 to $945.70 per ounce in trading in New York yesterday and silver was up 18 cents to $17.90 per ounce. Gold and silver have traded in a narrow range in Asian and early trading in Europe. Gold reached new record nominal highs at $952.75 and silver has surged over $18 per ounce to new 27 year highs at $18.06.


Gold also surged to new record highs in British pounds and in euro. The London PM Fix at 1500 GMT yesterday afternoon was at $945. Gold fixed at new record highs at £482.76 and €641.20.

Increasing fears of stagflation drove gold to new record highs (non inflation adjusted highs) in major currencies. Both the ECB and the Federal Reserve have lowered their growth estimates and the Fed has also increased its inflation forecast. The Philly Fed Index fell to its lowest level since 2001 and unemployment news was poor with the 4 week moving average of jobless claims rising 10,750 to 360,500. Meanwhile most commodities continued to rise with zinc and copper surging, leading the base metals higher. Equity markets in Asia and Europe are down and fears of a U.S. recession are sure to be to the fore.

Despite, the significant and growing inflation, markets have moved to fully price in a 0.50% rate cut at the next FOMC meeting in March. Central bankers are throwing in the towel in the fight against inflation in order to try and prevent a systemic crisis and a subsequent deep recession. The risk is that they let the inflation genie fully out of the bottle. Thereby wreaking havoc in the form of an inflationary spiral as was experienced in the 1970's (or worse in 1920's Germany which led to order-of-magnitude increases in prices and interest rates, redenomination of the currency and a wholesale consumer flight from cash to hard assets).
22-Feb-08 Last 1 Month YTD 1 Year 5 Year
Gold $   945.60
6.33%
13.47%
40.04%
169.32%
Silver     17.91
11.97%
21.28%
26.23%
284.40%
Oil     98.23
9.58%
-0.94%
61.37%
176.08%
FTSE     5,912
2.99%
-8.12%
-7.34%
59.23%
Nikkei   13,500
7.37%
-11.80%
-25.44%
58.57%
S&P 500     1,343
2.44%
-8.57%
-7.81%
58.28%
ISEQ     6,416
-1.24%
-7.47%
-35.42%
63.18%
EUR/USD   1.4835
1.31%
1.71%
13.03%
37.85%
© 2008 GoldandSilverInvestments.com


A Volker style period of tighter money and short term austerity would be more prudent in order to safeguard the health of the increasingly debased U.S. dollar and in order to help put the U.S. economy back on a more sustainable long term economic trajectory involving less consumption and speculation and more saving, production and exports. Savings are necessary in order to fund capital investment, production and long term economic growth. Unfortunately the U.S., unlike China and its other large creditors, has forgotten this in recent years and bought into the new paradigm fantasy that the service economy and profligate levels of debt and consumption could create a healthy sustainable economy.

Support and Resistance

Strong support in gold is now seen at $890 to $900. Short term support is at $940 and $915. After a short healthy consolidation in the $850 to $935 range, gold has broken out on a daily closing basis. A weekly close above $935 today will be very constructive. A close on a weekly or even daily basis above $935 should see us challenge $1,000 per ounce in a very short period of time.

Silver

Silver is trading at $17.91/96 at 1200GMT. Silver remains extremely undervalued and $25 looks likely in 2008. Silver's nominal high of $50 per ounce is likely to be reached in the next 3 to 7 years.
http://www.moneyweek.com/file /28810/why-the-silver-price-is -set-to-soar.html

PGMs

Platinum is trading at $2135/2145 (1200GMT).
Palladium surged to over $497/502 per ounce (1200GMT).

The big ‘M' or momentum is clearly in favour of precious metals. While these markets may be overbought in the short term, markets can remain overbought for long periods and it would be prudent to make the trend your friend.
Newton's First Law of Motion is important to consider in this regard. “In the absence of a net force, a body at rest remains at rest, and a body in motion remains in motion indefinitely along the same straight line.” While no asset moves in any direction indefinitely they tend to move in either direction in the medium to long term. This was witnessed in stock and property markets in recent years and will be witnessed in the precious metal markets in the coming years.

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold Investments
Tower 42, Level 7
25 Old Broad Street
London
EC2N 1HN
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules