Gold Stages Strong Rally
May 16th, 2008 | By Doug Casey | Category: Gold MarketGold was dead flat straight through the overseas markets yesterday, but once the NYMEX opened it was off to the races, shooting as high as $887 before selling off about $8 at the noon hour, but then catching a second wind in the Globex and pushing to a finish at $881.00, up $16.60.
Overnight, gold has edged higher in the overseas markets.
Platinum also caught fire at the New York open, and moved higher through the day with only minor pullbacks, ending at $2081/oz., up $49. Overnight, platinum has been pushing higher.
Silver followed gold’s chart pretty closely, although it didn’t fare quite as well in the afternoon, closing at $16.65, up 16 cents. Overnight, silver has been trending higher.
(Click here for charts)
A very interesting day for the precious metals, especially gold, with the metal moving sharply higher despite the headwinds set up by the usual suspects, as the dollar held steady to higher and oil retreated.
What happened?
One opinion: “Gold surged initially on technical buying and short covering prior to weak data in the form of Empire and Philly Federal Reserve indices, industrial production, weekly jobless claims and the TICs data — all of which were neutral to negative, which exacerbated the move to the upside” for gold, said Mark O’Byrne, of Gold and Silver Investments Ltd.
One day, of course does not a trend make, particularly in light of the metals’ recent weakness, but the day did have some optimists flying the up banner.
“You’re seeing some new buying come back into gold,” said Frank McGhee, of Integrated Brokerage Services in Chicago. “The dollar has stopped its immediate- term rally. Gold is still $200 too cheap, given where oil is.”
Needless to say, adding $200 would take gold well into new record territory.
If gold should detach from oil, as traders come to see it as a cheaper alternative inflation hedge, it will be a radical departure. Last year, gold moved in tandem with oil 92% of the time, according to Bloomberg.
But even gold bear Dennis Gartman, editor of the Gartman Letter, admits that, “Crude is inordinately expensive relative to gold.”
Source: Gold Stages Strong Rally
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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.