Precious Metals Back Off
May 8th, 2008 | By Doug Casey | Category: Gold Market
Gold had a very choppy day that saw it peak short of $880 in the far East, then decline steadily during London and the first hour of the New York session on Wednesday, but then bounce off an $865 low three times by noon, after which the trend was gently upward, to a finish at $867.80, down $7.90.
Overnight, gold has been edging higher in London.
Platinum also skidded into New York’s first hour, but it then fought its way back to neutral, ending at its intraday high of $1961/oz., up $1. Overnight, platinum is sharply higher.
Silver followed gold’s lead almost exactly, falling as low as $16.45 before rallying back to a close at $16.60, down 24 cents. Overnight, silver has been flat.
(Click here for charts)
Although the metals got some support from still-rising oil prices, the dominant factor was the dollar, which strengthened enough to drag gold and silver down after three straight positive sessions.
Also factoring in were reports out of India that gold sales during Akshaya Tritiya, the Hindu religious festival considered an auspicious time to buy gold, have been disappointing.
Julian Phillips, an analyst at GoldForecaster.com, admits that the finance ministers from the G-7 industrialized nations “have made it clear that they do not like a weak dollar and will do something about it, which could be why the dollar is stronger” against the euro.
However, “We believe the gold price will soon reflect a bigger picture than simply the euro/dollar exchange rate,” Phillips said.
And “with supply disruptions continuing to push oil to higher levels, gold looks set to benefit from further inflation-related hedging in the short term, while strong physical demand helps provide a strong base,” wrote James Moore, of TheBullionDesk.com.
That physical demand isn’t likely to abate, as even one member of the Fed talked openly about inflation yesterday.
“The real current threat to the economy is inflation, as food and fuel are taking a big bite out of everyone’s wallet,” said Miguel Perez-Santalla, of Heraeus Precious Metals Management in New York. “With this kind of mixed news [strong dollar vs. rising inflation], the market is sure to be choppy in metals and any big dips may be considered good buying opportunities.”
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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.