Daily Commentary

Market Waits Fed Decision

Gold traded slightly lower in the overnight markets and as the New York market opened we had silver up about $.15 and gold down $2.  However, during the first 30 minutes of trading, silver gave up the gains moving to a $.04 loss and gold fell back to an $8 loss in very light dealings.  Much of the trading action today is simply anticipation of what The Fed might do.  Central bankers are jawboning both here in the U.S. and in Europe. 

The ECB President, Trichet, has said that people have misunderstood his comments and that he is not signaling a series of rate increases.  However, several central bankers from Europe indicated that they are vigilant against inflation and concerned about the increases in food and energy costs.  One central banker is saying that global markets had misunderstood the large demand for oil.  While ECB remains on heightened alert status over the near to medium term over inflation they believe it is too early to speak of "stagflation" and one banker, Wellink, said "this situation is not like the high inflation reached in the 70's."  Obviously with European banks suffering and the European economy weakening the risk of higher interest rates outweighs the risk of inflation.  The same is true here in the U.S. 

While The Fed is meeting today, it is expected to leave rates unchanged and to talk tough about inflation.  I believe that is already placed into the market.  Nevertheless, in a thinly traded market, gold has found itself once again in the $880-900 trading range and may remain there for another couple of weeks until we get through the 4^th of July period.  I identify this timeframe as the ECB meets on July 3^rd and we will await the decision of that central bank in so far as determining the direction of the dollar and therefore, gold. 

Barclays Bank announced that it raised a substantial amount of capital today.  All of these banks are going hat in hand seeking capital wherever they can.  Some banks are selling off divisions and making whatever efforts they can to raise capital.  At the moment, the analysts who are interviewed on the news wires are focusing their attention on the policy statement of The Fed later today.  We can expect the market to vacillate and achieve clearer direction after the decision of The Fed is released.  If The Fed indicates concern about the economy or the banks, rather than inflation, then we are likely to see a substantial rally in the afternoon.  However, it is best to wait and allow the markets to dictate their direction. 

Other news is somewhat mixed.  Durable goods orders were expected to be down .5% and were unchanged.  That was  better than expected.  Gold is also feeling some pressure from softer oil prices.  Oil is down $.81 at $136.21.  The dollar is also slightly weaker down 13 basis points at $73.12.  In addition, May new home sales were down less than expected.  They fell 2.5% versus of an expectation of 3%.  On balance, I believe the news is relatively neutral .  While further correction is possible, those who utilize Goldline's price guarantee program can take comfort from the knowledge that they have some price protection during the next two weeks after they place an order.  Many people have utilized Goldline's price guarantee program to their advantage.  It enables you to get into the market now while gold and silver are truly bargain priced.  Call Goldline for help in getting started at 800-827-4653.  Be mindful of the fact that The Royal Bank of Scotland and others are forecasting a stock and financial market crash within the next 3 months.  Moreover, The Wall Street Journal itself is warning about the severe problems with the banking system and the fact that it may be very difficult for banks to raise the additional capital they need.  Some are forecasting that capital needs are in excess of $65 billion this year.  Read the articles from The Royal Bank of Scotland, the article from Fed governor Richard Fisher and the other information that we provide you including the quote from Schroeder Investment Management forecasting that gold may rise above $5,000 an ounce in the next few years.  All of this information will be very helpful.  Call now 1-800-827-4653

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^{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.}

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