Gold had a nothing day yesterday, but most of the action it did have occurred on the Comex in New York, where an attempt to break through $740 was once again thwarted. Silver was where all the action was. After a 20 cent sell off on the Comex open, silver jumped up sixty cents from the bottom by lunchtime, but someone was there to put an end to this “irrational exuberance.”
From Reuters we get the headline “The Banks Are Cheating Us”, with the subhead “Hong Kong investors protest Lehman Brothers losses”, which made me laugh, “Hahahaha!” and think, “Welcome to the real world, Hong Kong chumps!”
The commodity “supercycle” isn’t dead, says Justice Litle. Global demand has flat-lined for now, but the fundamental story of emerging market growth has not changed. And low prices are forcing many mines to shut down operations. This means that when demand recovers, it will do so faster than new supplies can reach the market. And that’s when gold will soar past $1,200 an ounce.
We’re deep into bear market territory right now… aren’t we? Frank Hemsley isn’t so sure. He says commodities are actually still in a long-term secular bull market. The current slump is just a temporary correction of prices that ran away in the last year. Frank says commodities will soon continue their bull run, breaking through new highs in the process.
The European Central Bank is “purposely causing inflation” and is therefore insane, says The Mogambo Guru, Richard Daughty. The mission of the central bank is to control inflation. Of course, it’s all the more reason to buy gold and silver now.
Is nowhere safe? Even physical assets - which are usually considered a safe-haven from stock market turmoil - have fallen sharply in the last month. Only gold and silver have held up against the tide…just. Commodities specialist Lee Lowell says there will be plenty more volatility in the weeks to come. But he says those who do not join the panic selling will win out in the end…
“The world’s financial, monetary and economic system is in ruins,” says Ed Steer in Casey Research. There’s so much bad news it’s difficult to know where to start. The silver lining is gold and silver prices look set to explode…
Since whispers of a Lehman Bros collapse started to circulate almost two weeks ago the US dollar index has slumped 4.8%. And the $700 billion Paulson bailout plan has done little to shore up dollar strength.
There are “fears that the package may cost too much, drive up inflation, swell the already bloated U.S. deficit and hurt the ailing economy,” reports AP.
Eric Fry says his investment strategy is based on a simple formula: “Sell the dollar, sell the dollar and sell the dollar.” And as the buck gets whacked, so will American stocks and bonds. On the other hand, foreign assets and commodities should soar…
On Tuesday, the Reuters/Jefferies CRB commodity index had its best day in history. “Nearly all commodities enjoyed a goosing yesterday,” according to Addison Wiggan and Ian Mathias in the 5 Min. Forecast.
However, Eric Roseman says, “Until the deflation ceases, commodities will remain vulnerable. Never in the history of capitalism have commodity prices rallied during a severe contraction in bank credit.”
Nevertheless, he predicts that inflation is still hard-wired into the global economy. That’s why he’s buying distressed oil companies and oil equipments stocks alongside the best-positioned global insiders.
A genuine gold bug is a person who is emboldened by knowing that 4,000 years of continuous economic history proves that EVERY fiat currency has failed, as they will always fail, and that gold will rise, just like it always has…