Gold Soars After Rate Cut
Posted on: Dec 17th, 2008 | By Doug Casey | Filed under Financial News
Gold was slightly lower until the mid-point of London trading on Tuesday, but headed modestly upward from there to the close of the Comex, at which point it went near-vertical, soaring $20 on the Globex to finish at $857.50, up $20.60. Overnight, gold is slightly lower.
Platinum bottomed at $830 around mid-morning, then pushed higher through both the Comex and Globex, edging past gold and ending at $863, up $28. Overnight, platinum has been flat.
Silver followed a path very similar to gold’s, with an even more stunning spike on the Globex that carried it well past $11 to a close at $11.21, up 58 cents. Overnight, silver is trending lower. (Click here for charts)
Tuesday was a smashing follow-up to Monday’s solid start to the week for the precious metals, as all three kicked into high gear late in the day, following the Fed meeting.
Whatever downward pressure was exerted by falling oil prices was minimal. Equities that rose in the wake of the Federal Reserve’s decision to slash interest rates to the bone probably helped, and the sinking dollar that resulted from that decision definitely did.
Gold’s gains “match the fall in the dollar all the way,” said Julian Phillips, editor at GoldForecaster.com.
Frank McGhee, of Integrated Brokerage Services in Chicago, threw tact to the wind, saying that, “The dollar is going to the sewer, and this is highly bullish for gold.” And he added that, “The Fed is going to put as much liquidity into the system as it takes, but at the end of the day, what’s their exit strategy? It’s a huge inflationary bubble.”
As gold has rallied, companies that mine it have been rising as well.
Dan Norcini, writing on jsmineset.com, comments that “the HUI is trading above the 100 day moving average, a significant technical achievement. The XAU has not quite mustered the strength to best that level but the session high from yesterday and its current session high is right on that level so it is attempting a breakthrough. Should both indices manage two consecutive closes above that level, especially with the 10, 20, 40 and 50 days all turning higher, it will be difficult for even the most die-hard gold bear to argue against the move.”
We sure won’t.
Source: Gold Soars After Rate Cut
Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.