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Stock-Markets / Financial Crash Jun 18, 2008 - 11:17 AM GMT

By: Mark_OByrne

Stock-Markets Gold Update
Gold closed at $8 8 4 .20  in New York  yesterday and was  up $ 1.0 0  and silver closed at $1 7. 05, down 19  cents.  Since then gold has again traded in a range between $880 and $890 in Asia n and in  early European trading this morning .


Gold remains firm after the poor e conomic data from the US  yesterday which showed that housing starts and permits continue to slide, industrial production  also fell and was weaker then expected , producer prices rose by more than anticipated - the Labor Department said producer prices over the last 12 months were up 7.2 percent in May, the eighth consecutive month prices rose more than 6 percent on a yearly basis.  Also, the current account deficit widened again, rising to $176.4 billion in the first three months of the year from $167.2 billion in the fourth quarter. Net financial flows into the United States fell to $124.3 billion from $213.4 billion

With oil remaining near record highs in a narrow range between $130 and $140 a barrel and the price of commodities surging, many to new record highs, inflation pressures continue to grow.

Soybeans, corn and the benchmark CRB Commodities Index all hit new record highs yesterday. This should result in gold remaining above support at $850 and continuing in the $850 to $950 range in the 'summer doldrums' (months of June, July and August) prior to breaking out in August (as it did in August 2007) and rechallenging $1,000 in the autumn.

As long as the Federal Reserve continues to keep real interest rates negative and money supply in the U.S. and internationally continues to surge at unprecedented rates, the dollar will remain weak and gold will remain in a bull market. Especially with macroeconomic conditions looking like a more virulent version of the stagflation of the 1970's.

Royal Bank Of Scotland Issues Crash Alert and BIS Warns of Great Depression.
Global stockmarkets are braced for one of the worst crashes in 100 years, according to the Royal Bank of Scotland (RBS) credit strategy team. RBS credit strategy team , i n a special report for clients, said it expects inflation to paralyse economies and spark the crash. The report advised investors to be prepared for a severe downturn in global stock and credit markets, saying the S&P 500 index is likely to fall by more than 300 points to around 1,050 points by September.

Mr  Bob Janjuah,  the reports author is highly respected in the City after his  foresighted warnings last year about the credit crisis proved accurate.

Meanwhile, the Bank of International Settlements (BIS) has continued to warn of a possible second Great Depression.  The Bank for International Settlements, the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930's. In its latest quarterly report, the body points out that the Great Depression of the 1930's was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart. 

According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.

Today's Data and Influences
There is no US data due for release today leaving the precious metals markets looking to breaking news and equity markets for direction.

Data to watch will be the Bank of England minutes for its June meeting later today  which will likely show the BoE's growing worry regarding surging inflation .

Silver
Silver is trading at $1 7.05 /1 7. 1 0 per ounce (1 100 GMT).

PGMs

Platinum is trading at $20 73 /20 83 per ounce (1 100 GMT).
Palladium is trading at $4 60 /4 6 5 per ounce (1 100 GMT). 

By Mark O'Byrne, Executive Director

Gold Investments
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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.

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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

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