Gold Hit by Bear Raid, Despite Real Inflation at 10%

By: Mark_OByrne

Gold finished trading in New York yesterday at $903.00, down $14.00 but silver was up 5 cents to $17.35 . After sharp falls in early trading in the COMEX yesterday (some of which was due to large stop loss sell orders being triggered around the $900 mark) gold rose to close only down some 1.5% on the day. Silver in similar volatile trading surged from interday lows to close higher. The rally continued in electronic trading and in Asian and early European trading. 

The rising 200 day moving average at $887 remains strong support for gold and it seems extremely likely that this is another bear raid and another summer correction prior to the period of traditonal seasonal strength for the precious metals - the autumn. Those short this market beware as they are likely to get their heads handed to them on gold plates in the coming autumn months.

Gold is up today as while oil is largely flat so far today yesterday's sharp rise in oil prices (some 4% in one day) may have given the gold bears pause for thought. The tensions with Iran have not gone away and geopolitical risk remains present which will result in further safe haven buying of gold.

Gold is also being supported by weakness in the dollar which has given up some of it's recent gains and renewed weakness in some European equity markets this morning.

Today's Data and Influences
Markets await  the release of the first estimate of Q2 GDP, with the Chicago PMI for July also featuring.  S econd quarter  GDP figures  are expected to increase to over 2% however given the dubious way in which many US government departments calculate statistics, one should not place too much faith in them.

Sir John Major and John Williams Say True Inflation at Some 10% in UK and US
As Ted Rall pointed out in a recent Yahoo News article: " The official inflation rate of two to three percent is a lie, and it has been for years. Presidents Reagan and Clinton ordered the Bureau of Labor Standards to change the way it calculates the Consumer Price Index. Previously they compared the prices of the same items from one year to the next. Now, in order to cheat senior citizens out of cost-of-living increases on their Social Security payments, the government uses a "substitutions" analysis. "The consumer price index assumes that if prices get too high, consumers will start buying cheaper products," reports The San Diego Union-Tribune . For instance, if steak gets too expensive, they will switch to ground beef."

Steve Reed, an economist the Bureau of Labor Standards, freely admits the change makes inflation looks lower than it is. He also admits its motivation: "Even if the CPI was one percentage point higher, it could cost the government hundreds of millions of dollars."

John Williams , an economic consultant who publishes the monthly newsletter "Shadow Government Statistics," calculates that " Shadow Government Statistics," calculates that "inflation is actually running at an annualized rate of 9.95 percent." 

A nd this incredible financial charade is not confined to the U.S.

Sir John Major, the ex Prime Minister of the UK says that inflation in the UK is also running at multiples of the official government figures and he believes inflation is actually at over 10%. Just two weeks ago Major warned that true annual rate of inflation is as much as 10 per cent and that changes to the way inflation is calculated had been "extremely misleading", with increasing food prices and heating bills not reflected by the official statistics on the cost of living.

He told BBC1's Andrew Marr Show: "I would say inflation is probably double the RPI [Retail Prices Index] figure, so we're between 8 and 10 per cent."

With governments hedonically adjusting and articially manipulating financial and economic statistics, it is more important than ever that investors focus on financial and economic reality and not some hoped for facade. Investors who continue to heed the soothing sounds from governments and Wall Street will see their wealth further sharply eroded in the coming years.


Gold and Silver
Gold is trading at $9 12 .20/9 12 .70 per ounce (1 115 GMT).
Silver is trading at $17. 53 /17. 57 per ounce (1 115   GMT) .

PGMs
Platinum is trading at $17 38 /17 4 8 per ounce (1 115   GMT).
Palladium is trading at $38 0 /3 8 5 per ounce (1 115   GMT).

By Mark O'Byrne, Executive Director

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.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.