Gold up Slowly but Steadily – Other Precious Metals Fail to Follow
Jun 25th, 2008 | By Doug Casey | Category: Gold MarketGold had a day without any major ups or downs after Monday’s sell-off, but with a slow upward bias back toward the $900 mark that led to a finish at $889.40/oz., up $5.70. Overnight, gold has drifted lower.
Platinum was strong in the overseas markets, but sold off a late morning New York rally and stayed down, ending at its intraday low of $2012/oz., down $23. Overnight, platinum has been trending lower.
Silver failed to follow gold, declining after holding in positive territory until the noon hour, and closing at $16.65/oz., down 13 cents. Overnight, silver has edged higher.
(Click here for charts)
Gold posted the gains that should be expected as oil rises and the dollar sinks, but holders of silver and platinum had to be disappointed that their favored metals failed to follow the yellow metal’s lead.
The natural conclusion would seem to be that the gold market is responding to flight to quality issues, while the more utilitarian precious metals markets may have been spooked by the unceasing flow of dismal US economic news. If gold is moving beyond concern about the prospect of slumping physical demand, that would be a very bullish development.
In addition, there may have been “some buying ahead of [today’s] Fed meeting,” said Frank Lesh, of FuturePath Trading in Chicago. “A lot of people don’t think the Fed can raise rates in this environment. They’re stuck between fighting inflation and the need to shore up the economy. The dollar is in a range, and that keeps gold trading in a range,” Lesh added.
More ominous news is coming out of the Senate Banking Committee, where “speculators,” who are becoming the bêtes noires of the investment world, are increasingly being targeted by proposed legislation.
Drafts of bills currently on the table would seriously curtail the activities of investors in commodities by: prohibiting private and public pension funds from investing in agricultural and energy commodities; establishing limits on the share of commodities markets held by investors; and imposing speculative position limits on anything not related to real hedging activities.
In and of themselves, steps such as these are bad enough, but anyone with a sense of history knows that once government opens a door a bit, it usually isn’t long before it’s kicked in.
In other words, while only large-scale speculation may be targeted today, everyone who invests in the sector may be targeted tomorrow. All commodity investors are cautioned to follow the path of this legislation closely.
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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.