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Gold has Largest One Day Gaim Since 1985 on Global Inflation Shock

Commodities / Gold & Silver Jun 27, 2008 - 09:52 AM GMT

By: Mark_OByrne

Commodities

Best Financial Markets Analysis ArticleGold surged to $912.30 in New York  yesterday and was up $32.70 and silver closed at $17.12, up 64 cents.

Gold surged in what was the largest one day move since 1985 as the dollar weakened, oil prices surged to new record highs and stock markets fell sharply. While gold was up some 3%, most U.S. stock indices were down some 3% and this continued in Asia and early European trading with gold rising to over $920. Although European indices have recovered somewhat as the morning has progressed, gold has continued to remain firm and safe haven demand has reemerged on decreasing risk appetite.


Next resistance for gold is at $934 and $953 and it looks increasingly like the recent consolidation may be over with very strong support now seen at $850. Given the confluence of so many bearish factors for bond and equity markets we remain firm in our belief that gold will reach our 2008 prediction of $1,200 per ounce before the end of 2008.


Barclays Joins RBC in Severe Warning and RBC and Russians Diversify into Gold
We appear to be about to embark in a period of increasing turbulence and instability in financial markets which will result in higher gold prices due to its safe haven characteristics. Now Barclays have joined Royal Bank of Scotland in issuing a severe investment warning.

Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".

Tim Bond, the bank's chief equity strategist said that we are now in “a nasty environment.    . . .   There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Gold is primary an asset of wealth preservation. And large institutions are coming to realize this again. The Royal Bank of Scotland has given gold a 25 per cent weighting in its latest investment fund targeted at expatriate customers. Performance is weighted equally across four sectors: emerging equities, developed equities, property and gold.

Yesterday came news that Russia's oil funds may invest in gold. Moscow-based agency RIA Novosti said, citing a finance ministry official. Russia's Reserve Fund and the National Wellbeing Fund were worth a combined $161.9 billion on June 1. The Russian central bank along with the Chinese and other ‘emerging' market, second tier central banks has been increasing its gold bullion reserves in recent months.

As more institutions, sovereign wealth funds and central banks increasingly diversify into gold, we will see gold rise to multiples of its current price as it is such a tiny marketplace when compared to the size of equity, bond and currency markets.

Today's Data and Influences
Commerce Department data due out Friday is personal income, personal consumption and PCE inflation (which bizarrely excludes ‘volatile' food and energy components). The only release of note today in the UK is the current account deficit which is expected to widen to 12.5 billion pounds.

Silver
Silver is trading at $17.54/17.60 per ounce (1230 GMT).

PGMs

Platinum is trading at $2062/2069 per ounce (1230 GMT).
Palladium is trading at $466/470 per ounce (1230 GMT). 

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
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Email info@gold.ie
Web www.gold.ie
Gold Investments
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London
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United Kingdom
Ph +44 (0) 207 0604653
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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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