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Crude Oil Record High Buoys Gold

Commodities / Gold & Silver Apr 16, 2008 - 11:15 AM GMT

By: Mark_OByrne

Commodities Gold is up in London this morning. Gold was up $2.60 to $927.80 per ounce in trading in New York yesterday and silver was up 2 cents to $17.79 per ounce. The London AM Gold Fix at 1030 GMT this morning was at $932.75, £472.40 and £586.27 (from $ 931.75, £473.55 and €588.30 yesterday).


With oil and commodities surging, the dollar continuing to weaken (see below) and economic growth slowing – gold's best friend stagflation is a real and growing threat to much of the global economy.

Oil has remained near record levels above $114 per barrel (it reached a new record at $114.50) and this will mean that the worrying inflation statistics of recent weeks will soon get worse, making central banks jobs even harder and continuing make gold an important part of a properly diversified portfolio..
16-Apr-08 Last 1 Month YTD 1 Year 5 Year
Gold $      935.37 -6.55% 12.24% 35.48% 186.30%
Silver       18.01 -12.78% 21.93% 28.27% 302.00%
Oil      114.12 3.60% 15.07% 79.51% 291.09%
FTSE       5,946 5.57% -7.60% -8.75% 54.23%
Nikkei      13,146 7.38% -14.12% -25.42% 66.84%
S&P 500       1,334 3.59% -9.12% -9.12% 51.65%
ISEQ       6,011 0.18% -13.32% -38.05% 44.12%
EUR/USD      1.5943 1.65% 9.31% 17.86% 46.15%
© 2008 GoldandSilverInvestments.com

 

More evidence of slowing economic growth and rising inflation was seen in EU data showing annual inflation across the euro zone hit an all-time peak in March. Inflation in the euro zone reached an annual rate of 3.6% in March, the highest since the launch of the euro in 1999.

The euro hit a record high against both the dollar and sterling. The euro hit a new high of $1.5957 by late morning while it also reached a new high of 80.70 pence sterling.

The US CPI report for March is due for release today and if it comes ahead of expectations (as the PPI report did) the dollar may come under pressure and gold rally. Another strong inflation report is likely to push markets closer towards the view that the Fed will only cut rates by 0.25% at its meeting at the end of the month. Later today the Fed issues its Beige Book on economic conditions which will shed light on the Federal Reserve's thinking as to handle the growing threat of stagflation.

The UK economy looks set for a serious economic correction. TDX Group, the debt management analyst that provides services to the corporate sector, has published an alarming report that suggests nearly 600,000 Britons will be unable to refinance their debts this year. According to the report, around one million Britons have collectively amassed £25 billion of unsecured debt that they cannot repay, giving an average financial headache of £25,000. In 2007, around 400,000 people remortgaged their property or applied for new credit cards or personal loans, to pay off existing debt. Also last year, approximately 300,000 consumers opted for bankruptcy, debt management plans or individual voluntary agreements (IVAs).

London, as one of the leading financial capitals of the world looks set to suffer significantly in the coming months. Total job losses in London's City financial district are likely to hit 40,000 due to fallout from the U.S. subprime crisis and global credit crunch, analysts at JPMorgan, doubling their previous estimates. The shakeout equates to 5 percent of jobs compared with losses of 7 percent after the dotcom bubble burst in 2000-01.


Support and Resistance

Support is at $905 and strong support is at $880.

Recent resistance at $950 is likely to be challenged in the coming days as investors realize that inflation is not some short term phenomenon but rather a medium and possibly long term problem yet to be priced into the market.

Silver

Silver is trading at $18.09/18.13 at 1215 GMT.

PGMs

Platinum is trading at $2000/2010 (1215 GMT).
Palladium is trading at $459/464 per ounce (1215  GMT). 

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold Investments
Tower 42, Level 7
25 Old Broad Street
London
EC2N 1HN
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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