Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Gold and Platinum- A Tale of Two Metals

Commodities / Platinum Mar 19, 2008 - 08:14 AM GMT

By: Money_and_Markets

Commodities

Best Financial Markets Analysis ArticleSean Brodrick writes: "It was the best of times, it was the worst of times," Charles Dickens famously wrote. That certainly describes markets nowadays, doesn't it?

Heck, Ben Bernanke chopped both the fed funds rate and the discount rate by 75 basis points yesterday — another indication of just how bad things have really gotten.


In the "worst of times" column:

Arrow The dollar, which is on the Slip n' Slide of doom! It hit new lows against the euro and multi-decade lows against the yen this week.

Arrow Stocks, which get shellacked, snap back, and then get shellacked again.

Arrow The housing market, which remains in freefall.

Arrow The credit crisis, which continues to spread.

Arrow And real inflation that continues to rocket higher!

Where are the best of times, you ask? In commodities investments! We've recently seen $111-a-barrel oil, $1,000-an-ounce gold and $21-an-ounce silver. This is no great surprise: As anxiety and panic reign on Wall Street, commodities (i.e. "real assets") move higher as investors rush to safety. While commodities have pulled back from their highs, it's probably a pullback you can buy.

However, not all metals are created equal. There are some, one in particular, that I definitely like right now, and at least one that I wouldn't touch.

So sit back, lend an ear, and let me tell you a tale of two metals ...

The Best of Metals: Gold

My top pick among not just metals, but all commodities, is gold. Reason: I firmly believe it's in a powerful up-trend.

And sure enough, gold showed the most strength on Monday when traders were selling EVERYTHING else — stocks because financials are going up in smoke, and commodities to cover their losses in financials.

Plus, there are the bullish long-term forces driving gold higher as well. Forces including ...

Bullish Long-Term Force #1: The Supply-Demand Gap

Global spending for the exploration of nonferrous metals (mostly gold and silver) hit $9.99 billion in 2007 — up 33% from the previous year and way, way up from the $1.9 billion spent in 2002. Despite that, AND soaring prices, gold production actually dropped to a 10-year low.

Why is production falling while spending and prices are rising? Because for decades, there was under-investment in exploration, and it can take seven to 10 years to bring a new mine on line. The dearth of spending for so many years has opened a large gap in exploration and development.

Gold production may go up a little this year, if everything goes right. The problem with mining is that things often go wrong.

And demand isn't going to wait ...

Bullish Long-Term Force #2: Gold ETFs are buying big-time!

The streetTRACKS Gold Shares ETF now holds 653 metric tonnes of gold. This puts it far ahead of many Central banks, including those of the Netherlands, China, Russia, as well as the European Central Bank.

Add in gold demand from other ETFs around the world and ETFs are quite a force. And they're going to get bigger. The World Gold Trust, the sponsor of the world's largest gold ETF, forecasts a 30% increase in their gold ETF products this year.

According to data from the World Gold Council, jewelry demand is rising as well, despite higher gold prices. And demand from the Middle East and Asia is just starting to hit its stride.

Bullish Long-Term Force #3: The Swooning U.S. Dollar

I take no joy in saying this — I have greenbacks in my wallet, too — but the U.S. dollar is being beaten so badly that one of these mornings I expect to turn on the TV and find out that Treasury secretary Hank Paulson has taken Ol' Greenback out behind the shed to shoot it and put it out of its misery.

As the dollar goes into freefall, the gap between it and gold is turning into the Grand Canyon.

Since the Bush administration took office, the U.S. Dollar Index has tumbled 36%. It's down more than 6% just this month! Recession fears are driving the greenback lower as jobs disappear, home prices fall, consumer confidence plummets, and big financial institutions go belly-up.

And this latest fiasco with Bear Sterns is an indicator that the dollar could go downhill in a hurry. The Fed is putting itself on the hook for all the "toxic waste" debt that the big investment banks are sitting on; accepting this paper as collateral for loans to prevent the banks from becoming insolvent.

How can they do that? By cranking the printing presses into overdrive!

You can gnash your teeth about the Good-Time Charlies in Washington spending your money so freely, or you can just do the smart thing and buy gold.

We recently saw crude oil get back to its inflation-adjusted high from the 1970s oil crisis. Do you know how high gold would have to go to get back to its inflation-adjusted high? $2,271.59! I think gold has a bit longer to run!

One way to play it is through the big daddy of the gold exchange traded funds, the GLD. And since the current financial crisis will likely get worse before it gets better, this might be one of the times when you want to own gold bullion.

Gold isn't your only choice, of course. While the yellow metal is up 19.3% so far this year (through Monday's close), copper is up 22.4% ... nickel is up 23.4% ... and silver is up 36.3%. Most metals are GREAT investments, and should remain so for the rest of the year.

However, you should be aware of the other side of the coin ...

The Worst of Metals: — Platinum

It was just a month ago that I wrote about how hot platinum was .

Platinum crashed through support (the blue line), which then turned into overhead resistance.

South Africa produces 80% of world's platinum. Power shortages in that country cut platinum production by 16% in January. No wonder platinum surged 36% this year through the end of last week.

But the wheel turns, and now the white-hot metal is cooling off big-time. Going forward, it could be in for a precipitous drop.

The demand picture for platinum hasn't changed much since I wrote about it back in February. What is changing is supply and speculator sentiment.

The South African power utility, ESKOM, says it is coming to grips with the power shortage. What's more, South Africa is so concerned about the hard times for miners that it may drop plans to impose a royalty tax on mining companies. And lower taxes may encourage higher metal production.

This doesn't affect the short-term outlook on platinum, of course. But it is enough to send skittish hedge funds piling OUT of platinum the same way they piled in just a couple months ago.

And technically speaking, platinum's chart is sounding a big "sell" warning. It broke through support, which then turned into overhead resistance. It has weakness down to about $1,650, and perhaps lower.

Of course, this is only a short-term outlook. Next month, the lights might go off in South Africa again and the government there could decide platinum miners need to pay MORE taxes. And then we can ride the metal higher again.

Because that's the thing about metals — nowadays, even the worst of them is better than the best financial stock!

Good luck and good trades,

Sean

P.S. Don't underestimate the powerful forces at work in the markets! Instead, learn all you can and prepare your portfolio immediately. I urge you to start by watching the FREE online presentation that Martin, Larry and I just posted to the Internet. It will tell you all about the biggest threats to your investments, and the best ways to protect yourself — and potentially profit — from the landmark events unfolding right now. Don't delay ... view it right now. Just turn on your computer speakers and click here .

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets 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