Tuesday, April 18, 2006
Inflation Is Back!
Bloomberg reports on another amazing trading day. "Gold rose above $620 an ounce, the highest since 1980, as record oil prices and a drop in the dollar prompted some investors to buy bullion seeking a hedge against inflation. Gold has jumped 20 percent this year as oil climbed to a record $71.60 a barrel today. Gold prices are up 45 percent in the past year. Gold futures for delivery in June rose $4.50, or 0.7 percent, to $623.30."
"Silver for May delivery rose 42 cents, or 3.1 percent, to $13.785 an ounce on the Comex, after reaching $13.82. Prices are up 55 percent in this year.
"'Institutions are looking to hedge themselves against weakness in the dollar and inflationary threat,' said Brian Hicks. 'Gold can go much higher. It hasn't eclipsed its previous highs.''
"Mounting tensions over Iran's nuclear program helped sustain gold's 3.1 percent gain yesterday, the most since Sept. 11, and helped boost the price of oil. Iran is the world's fourth-largest producer. The prospect of a weaker dollar has also helped boost gold, analysts said. The U.S. currency neared its lowest against the euro this year after a report showed U.S. housing starts slowed last month, suggesting a weakening economy."
"'The strength in gold is revealing the general weakness in the dollar,' said Peter Schiff. Gold moved in tandem with the euro from 2002 to 2004. The relationship changed last year when gold gained 18 percent as the dollar climbed 14 percent against the euro."
"'A lot of demand for commodities is purely inflationary,' Schiff said. 'Money is losing value. It's not just the dollar. It's the euro. It's the yen. All these currencies are being debased.'"
"The dollar extended losses against major rivals Tuesday after minutes from the latest Federal Reserve monetary-policy meeting suggested the policy-making board could be at the end of its cycle of tightening interest rates."
"In late New York trading, the dollar was changing hands at 117.09 yen, down 0.6% from late Monday. The euro was up 0.8% at $1.2351. The British pound rose 0.8% to $1.7830, while the dollar was last down 0.9% at 1.2686 Swiss francs."
"Silver for May delivery rose 42 cents, or 3.1 percent, to $13.785 an ounce on the Comex, after reaching $13.82. Prices are up 55 percent in this year.
"'Institutions are looking to hedge themselves against weakness in the dollar and inflationary threat,' said Brian Hicks. 'Gold can go much higher. It hasn't eclipsed its previous highs.''
"Mounting tensions over Iran's nuclear program helped sustain gold's 3.1 percent gain yesterday, the most since Sept. 11, and helped boost the price of oil. Iran is the world's fourth-largest producer. The prospect of a weaker dollar has also helped boost gold, analysts said. The U.S. currency neared its lowest against the euro this year after a report showed U.S. housing starts slowed last month, suggesting a weakening economy."
"'The strength in gold is revealing the general weakness in the dollar,' said Peter Schiff. Gold moved in tandem with the euro from 2002 to 2004. The relationship changed last year when gold gained 18 percent as the dollar climbed 14 percent against the euro."
"'A lot of demand for commodities is purely inflationary,' Schiff said. 'Money is losing value. It's not just the dollar. It's the euro. It's the yen. All these currencies are being debased.'"
"The dollar extended losses against major rivals Tuesday after minutes from the latest Federal Reserve monetary-policy meeting suggested the policy-making board could be at the end of its cycle of tightening interest rates."
"In late New York trading, the dollar was changing hands at 117.09 yen, down 0.6% from late Monday. The euro was up 0.8% at $1.2351. The British pound rose 0.8% to $1.7830, while the dollar was last down 0.9% at 1.2686 Swiss francs."
# posted by Ben Jones @ 3:07 PM 
Comments:
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This is starting to get interesting. I don't put as much weight with Yellen as Wall Street does. What they are saying about stopping the rate hikes, IMO, is that we are near to tipping into recession. But with the huge trade and budget deficits, that policy risks a US$ collapse.
Well, the Fed wanted inflation to stave off deflation (see fall 2003). Now we'll find out how bad they really want it.
Congrats to the metal longs out there! You had to put up with a lot of name calling, but the institutions are buying now.
Well, the Fed wanted inflation to stave off deflation (see fall 2003). Now we'll find out how bad they really want it.
Congrats to the metal longs out there! You had to put up with a lot of name calling, but the institutions are buying now.
the institutions are buying now
Yes, definitely phase II. Any guesses as to how long before the public catches on? Gotta keep accumulating... prices now are still cheap!
Yes, definitely phase II. Any guesses as to how long before the public catches on? Gotta keep accumulating... prices now are still cheap!
hawk_i,
Yes, it's still under the radar. It doesn't take a whole lot of people to kick up activity in the PMs.
Phase III will be evident when radio ads, web ads & spam -- currently all mortgage-related -- are dominated by precious metal pitches.
Yes, it's still under the radar. It doesn't take a whole lot of people to kick up activity in the PMs.
Phase III will be evident when radio ads, web ads & spam -- currently all mortgage-related -- are dominated by precious metal pitches.
Gold almost $630 and silver approaching $14.50... amazing.
Yes, Mike, despite the recent action, gold just doesn't have the same warm fuzzies associated with it that real estate has had, especially for this last generation. Any societal biases are still firmly against gold, and the masses will continually be warned against "getting in on the top" of a "speculative investment bubble".
Yeah, I too am an FSO junkie, but although Dent's work is interesting I'm almost certain that the RE bubble bursting will eviscerate "the next great bubble boom". Either way, good for PMs.
Yes, Mike, despite the recent action, gold just doesn't have the same warm fuzzies associated with it that real estate has had, especially for this last generation. Any societal biases are still firmly against gold, and the masses will continually be warned against "getting in on the top" of a "speculative investment bubble".
Yeah, I too am an FSO junkie, but although Dent's work is interesting I'm almost certain that the RE bubble bursting will eviscerate "the next great bubble boom". Either way, good for PMs.
Mike,
Gotta think about that one!
Ben,
Sounds like another weekend topic:
"YOUR TIMELINE FOR THE GOLD BULL MARKET"
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Gotta think about that one!
Ben,
Sounds like another weekend topic:
"YOUR TIMELINE FOR THE GOLD BULL MARKET"
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