Thursday, May 11, 2006

 

Precious Metals Extend Rally

Reuters reports on the continuing rally in precious metals. "Heavy speculative buying, fueled by inflation fears and geopolitical tension, lifted gold to new 25-year highs on Thursday while platinum soared to its highest ever on strong fundamentals. Analysts said the metals were overbought and there were chances of brutal downward corrections, but bullish market sentiment was underpinning the market."

"Spot gold rose as high as $712.50 an ounce, the highest since September 1980, before easing to $707.10/708.10 by 1012 GMT. 'Growing momentum from investors and speculators looks set to extend its rally despite short-term overbought signals on the charts. Resistance is now expected at $740, $765 and $800 but gold could go all the way to its all-time high of $850 before correcting,' said James Moore, analyst at TheBullionDesk.com."

"Oil climbed towards last month's record high of $75.35 a barrel as dealers fretted that strong U.S. gasoline demand and outages at two refineries may quickly drain rising inventories. The dollar gained ground against the euro and yen, extending the previous day's climb after the U.S. Treasury stopped short of calling China a currency manipulator. But the upside was limited as investors expect U.S. interest rates to peak soon."

"Platinum rose as high as $1,275 an ounce on speculation that Johnson Matthey, the world's top distributor of the metal, will produce a bullish report on the market next week. The metal was later quoted at $1,272/1,277, up from $1,253/1,258 late in New York on Wednesday. Palladium was at $388/393 an ounce, versus $387/392."

"Silver edged up to $14.32/14.42 from $14.20/14.30. 'Given the extraordinary strength in commodities, the potential remains for silver to conquer the next target of $15,' Standard Bank said in a report."

"In industry news, South African gold output fell 9.3 percent in volume terms while overall minerals production declined 5.2 percent in March compared with the same month last year."

Comments:
Jim Rogers, former George Soros partner, is predicting $1,000 ounce gold +.

“The shortest bull market for commodities lasted 15 years, the longest 23 years…they've got a long way to go.” “Supply and demand is terribly out of balance…” “THIS IS NOT A BUBBLE.” “Nobody has opened any major mines anywhere in the world for many years and it takes a long time to bring new mines on stream.'' “All the old mines are in the process of being depleted and demand is continuing to grow.'' Jim Rogers

I think we will see gold pass a $1000.00 at some future point. We may well be near $900 by years end.I also believe we will see $100.00 dollar silver. May sound crazy to some, but I think we all see the direction the dollar is headed. Inflation is far greater than reported, etc...
 
wmbz,

That wouldn't even come close to their historical peaks, adjusted for inflation. Long term I expect new (inflation adjusted) highs for both; IOW, $2500+ gold and $150+ silver in 2006 dollars.

BTW, it's only May and we have $720 gold & $15 silver. I'd say $1000 gold before year's end.

p.s.: It cracks me up all these people stating commodities are in a bubble. Oh well... let'em miss out on a once-in-a-lifetime opportunity!
 
the regular joe won't jump in en masse till 2010 or later.
 
That wouldn't even come close to their historical peaks, adjusted for inflation. Long term I expect new (inflation adjusted) highs for both; IOW, $2500+ gold and $150+ silver in 2006 dollars.
# posted by TJ & The Bear : 10:44 AM

TJ, I know that's correct, we are along way off,when you factor in inflation. I'm thinking there will be some fairly harsh pull backs along the way, but so far we are rolling forward at a pace faster than I thought we would. No matter what I'm long and have been for a very long time. Of course some folks are calling for $38,000.00 gold. If that were to happen then a roll of toilet paper would have more market value than the dollar!
 
If that were to happen then a roll of toilet paper would have more market value than the dollar!


Uh, they're not that far apart now! Try pricing individual rolls at 7-11. ;-)
 
wmbz,

Ever read Jas Jain's missives on SafeHaven or FSO? He thinks PMs will become effectively priceless, since bullion stocks are so vastly outstripped by world money supplies.

john_law_II, Ben, et al...

There's definitely no PM bubble as long as this blog lags Ben's other blogs.
 
TJ,
That's an interesting contrarian indicator!
 
Ben,

Yes, I'm just waiting for the right moment to debut that little gem on HBB. Shan't be long...
 
There's definitely no PM bubble as long as this blog lags Ben's other blogs.
# posted by TJ & The Bear : 3:01 PM

That is correct! I read a peice somewhere on the net, that a PM bug had over a period of a couple months, stopped people on the street(some 240 total) an asked if they were buying any gold or silver? Of thoses that gave him the time of day only one said they were thinking about it. So yea, it would appear we have a long,long way to go.
 
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