Gold Soars Second Straight Day
May 17th, 2008 | By Doug Casey | Category: Gold MarketGold held steady above $880 through Hong Kong and the early London market yesterday, then started up and continued steadily up for most of the day, moving past $900, and recovering from each bout of selling to finish at $901.60, up $21.20.
For the week, gold pushed 2% higher.
Platinum followed a similar pattern to gold and, though it eased more late in the day, held well above $2100 to end at $2128/oz., up $47. For the week platinum gained just under 2%.
Silver shot higher, peaking at $17.04 in the late morning, but couldn’t hold above $17 as it slipped to close just short of the mark at $16.94, up 28 cents. For the week, silver tacked on nine-tenths of one percent.
(Click here for charts)
For the second straight day, everything came up roses for the precious metals, but unlike Thursday, this time they got a boost from the usual suspects, the falling dollar and rising oil.
Analysts noted that when gold soared to a record $1,033.90 an ounce on March 17, oil and the euro were also setting highs. Since then, however, gold has fallen off by about 13%, while crude has been on a tear, adding some 14%.
That has to change, says James Turk, of goldmoney.com.
“The gold and crude-oil relationship is out of whack and due to adjust … Gold has a lot of catching up to do and will rise as a result,” Turk believes.
On top of that, there is inflation. “Ever since gold became free trading in the early 70s, we’ve been telling you, ‘Buy it as an inflation hedge’,” wrote Peter Grandich, editor of the Grandich Letter.
“Everywhere one looks they see prices and costs rising … [and] as the inflation concerns grow, so should the price of gold,” Grandich added.
And on top of that, “Safe-haven buying is likely to have reemerged on both the surging oil price but also on the appalling consumer sentiment numbers which showed consumer confidence falling to their lowest levels since 1980 — 28 years ago,” wrote Mark O’Byrne, director at Gold & Silver Investments.
But for those playing both gold and oil, Ned Schmidt, editor of the Value View Gold Report, had a blunt warning, writing that, “Since no real shortage of oil exists, paper oil is being set up for a dramatic crash that will wipe out many small traders … For that reason, gold investors should step aside entirely.”
Source: Gold Soars Second Straight Day
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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.