Gold Points Towards $1,030 Target; Oil Reaches $142 a Barrel
by Joe Battaglia
Posted: June 27, 2008
All though the
dollar is only down 8 basis points at 72.40, gold is up smartly gaining another
$8 in early trading. Silver is up
$.30. Gold has now clearly broken out
above near term resistance levels and should now target a band of resistance
between $935 and $950. Some technical
analysts are remarking that having burst above the $910 level, on the key
futures contract, that gold is now pointing towards a target of $1,030. Oil made a new all time record high today
rising to $142.26 a barrel. It is
currently up $1.42 at $141.05.
Many analysts are
commenting on the interest rate situation.
The ECB has clearly indicated that it plans to raise rates ¼% on July 3rd. However, the European economy is weakening
and the statistics that are coming out from the U.S. don't offer much
comfort. With the economy weakening,
the banks in very difficult circumstances and inflation on the rise, it is a
catch-22 situation. If the ECB raises
rates it may throw the European economy deeper into recession. If they do not raise rates, it may allow inflation
to take off with a big burst to the upside.
We will know soon enough.
However, it is likely they will raise rates by ¼%, but perhaps indicate
that they may be on hold for a while.
JP Morgan's
analyst, Mike Jansen notes that silver could target $18 to $18.50 in ounce in
the near term. A good deal of the demand for gold is risk aversion. People are acquiring gold as a "safe haven
asset" and as an asset that can protect against falling currencies and rising
inflation pressures. This is likely to
continue. John Reade of UBS Bank said:
"There is no single factor behind the move, rather a number of drivers played a
role, the speed of the move and the combination of new highs in crude, renew
dollar weakness and further risk aversion make the risks bias to the upside for
now." In other words, he sees the gold
market moving upward.
There is a
considerable amount of chatter about central banks and sovereign wealth funds
moving to accumulate gold. That again
is another bullish fundamental factor as we look at supply versus demand. Meanwhile, supply continues to decrease as
mines are finding it difficult to produce gold, given the inflation pressures
and the political problems they have with the governments where gold is
located.
In the economic
data, the PCE price index rose 0.4% overall last month, with only 0.1% at the
core rate. This is the Fed's preferred
inflation gauge and they should feel comfortable with that. Personal spending rose 0.8% in May and
personal income was up 1.9%. The data
conveniently supports yesterday's Fed decision. Moreover, a good part of the consumer spending we are seeing
comes from the stimulus payments that hit in May. Those stimulus payments will continue to trickle in through
July. Therefore, we should continue to
see similar data for this month and next.
Looking at the increase in personal spending, it may also have something
to do with higher fuel and energy prices.
As inflation rises, personal spending naturally will increase. Consumer confidence has fallen rather
considerably. It is at the lowest level
in 28 years, at 56.4 basis the University of Michigan survey.
All in all, this
presents a situation in which investors need to own some gold and silver. Call Goldline and have them assist you in
getting started today at 1-800-827-4653.
Be sure you ask for the special reports we have been giving away. These special reports have been forecasting
precisely what is occurring now. They
will give you some in sight into what may be occurring over the next several
months. Be sure you read the Royal Bank
of Scotland report, which forecasts a stock market and financial market crash
within the next three months. Also the
comments from Fed Governor Richard Fisher are very important. Do not overlook the Bloomberg report quoting
Schroder Asset Management forecasting gold to rise above $5,000 in the next
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Investors should
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If you would like
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also provides several other helpful articles.
There are a number of other independent third party source articles that
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Call Goldline now to receive your free information package at
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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
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