Daily Commentary

Oil Knocking on the Door of $140 a Barrel

With an oil fire in the North Sea, oil is up $3.27 to $138.13 a barrel.  It has been as high as $139.89.  With oil knocking on the door of $140 a barrel, it is no wonder that gold is up $17 and silver posting a huge gain, up $.68.  Other metals likewise, are performing well.  The U.S. dollar is down 59 basis points at 73.56 and the equity market is slightly lower.  It now seems a foregone conclusion oil will reach at least $140 a barrel and perhaps even $150 before the year is over.  The group of eight, meeting over the weekend failed to provide support for the dollar.  Likewise, the meeting of the OPEC members did not do anything to assist in lowering oil prices even though they attempted to "jawbone" oil lower. 

Other commodities including agriculturals are also higher as the cost of doing business is increasing due to higher fuel prices.  Moreover, other economic data also support the concept that inflation will continue to move higher while oil supplies will become tighter.  Noted economist and analyst Kevin Phillips points out in his recent book that the combination of peak oil or declining oil production globally, combined with oil producers dissatisfaction with the tremendous loss of purchasing power of the dollar, are forcing energy prices upward.  Many are convinced that Middle East oil producers along with others are moving away from dollars which will have a further destabilizating affect on inflation pressures and will be very bullish for gold.  In fact, even political observers are commenting that the economy is suffering from the weakness of the dollar, which is about to become a political issue as well as an economic issue.

In addition, there is a growing recognization of some of the things that I have been saying for years.  Among these is the fact that the enormous deficit spending and the increase in the national debt will continue to destroy the purchasing power of the dollar.  If oil producers stop accepting dollars for oil, our country will experience a severe crisis.  Sooner or later there will have to be some drastic changes made.  Some analysts are talking about the possibility of a return to an international Bretton Woods style currency system based upon gold.  However, the consensus is that were that to occur gold would have to be priced at thousands of dollars an ounce. 

From a technical point of view, gold has held very nicely at key support levels on repeated tests.  This suggests that the path of least resistance will now be higher as funds are moving back into the precious metal sector.  Moreover, there is some talk that China may be establishing an enormous $1 trillion sovereign wealth fund.  From a political point of view, people are worried that they may use that fund to buy up premier American companies, essentially taking over the economic underpinnings of our nation.  There will probably be a great deal of political opposition to such developments.

In the banking sector the Fed is now offering banks $75 billion worth of 28-day credits through its term auction facility.  The minimum interest rate bid on that credit is only 2.05%.  One has to question whether the Fed has any ammunition left to assist the banks, which continue to have severe problems.  Many analysts are now confirming that they expect the problems in the housing market to continue through next year.  If they are correct, this will certainly continue to put extraordinary pressure on the banks.  There are trillions of dollars of credit derivatives and default swaps that could result in massive bank failures.  All of these factors suggest that the Fed must continue to expand the money supply in an effort to defend the banking system.  In that environment, the dollar must continue to decline and that is extremely bullish for gold.  Remember, Frank Barbera is forecasting that gold could get as high as $1,250 an ounce this year and silver could certainly move above $20.  This is a great opportunity to acquire precious metal assets at bargain basement prices.  Call Goldline today at 1-800-827-4653.

Investors should contact Goldline and ask them to explain the features, benefits and cost structure of the various gold and silver investments that are available to you.  Select those that best meet your own personal and individual investing needs and objectives.  Investors looking for low transaction costs may wish to consider bullion assets such as American Eagles, Krugerrands, Canadian Maple Leafs, Silver Bags or Silver Bars.  However, the Price Guarantee Program is not available with these assets. 

If you would like to take advantage of the Price Guarantee Program, which provides you with a two-week window of opportunity in which to re-price your order in the event of a correction, you must select assets with some collectible value such as Swiss 20 Francs, Double Eagles and Silver Dollars.  When you acquire 29 Swiss 20 Francs, you will receive the 30^th coin for free.  Investors may wish to consider several tubes of these coins to obtain several free Swiss 20 Franc gold coins.  Call Goldline at 1-800-827-4653 for further information.

To receive the free information package including articles on the dollar, the economy and gold call Goldline at 1-800-827-4653.  Goldline also provides several other helpful articles.  There are a number of other independent third party source articles that you will find extremely helpful and informative.  You will also receive the company brochure and a Coin Facts Risk Disclosure Booklet, which you should read carefully before you make an investment. 

Goldline will also send you a free CD of the special interview with analyst Frank Barbera if you ask for it.  This is a remarkable interview and I think everyone would benefit from listening to it.  Call Goldline now to receive your free information package at 1-800-827-4653.

^{You should carefully read the client Account Agreement and the Risk Disclosure information. These explain important things you need to know before you invest in precious metals, such as: past performance does not guarantee future results. Transaction costs are generally 5% to 10% on bullion and 30% to 35% on coins. This is also referred to as the spread, or the difference between the buy price and the sell price. The market must go up enough to overcome this spread before an actual profit is achieved. All markets go up and down. Coins are a long-term, three- to five-year, preferably five- to ten-year investment, suitable for 5% to 10% of the average portfolio. Please see Goldline's Risk and Disclosure Statement for further details.}

Back to Daily Commentary