$1,000 Gold In Sight!

February 27, 2008

Gold rose to records in London and New York and silver to new historic highs and silver gained to a 27-year high as the dollar’s all- time low spurred demand for precious metals as a hedge against inflation. Is the next stop $1,500 in a couple of years? Rememebr not too long agao when gold was $256 an ounce?

Gold is up 15 percent this year alone. That is $49 for teh month and up $274 for the last 12 months.

As the U.S. housing slump and turmoil in credit markets led the Federal Reserve to lower interest rates when commodities were rising to records. The dollar declined on speculation Fed Chairman Ben Bernanke will signal more rate cuts in testimony to Congress today. “With a weaker dollar, imports become more expensive and that can import inflation into a country,” said Ben Davies, chief executive officer of Hinde Capital Ltd. in London who helps manage the Hinde Gold Fund. “The Fed wants to inflate their way out of the problems of a huge deficit and a banking system that’s at the point of imploding.”

Gold has started off this morning up $11 to $965.

The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials climbed to an all-time high yesterday, and is up 16 percent this year, led by increases in wheat, soybean oil and sugar. Oil today rose above $102 a barrel for the first time. Who can afford $102 oil? This rubber band cannot stretch much further.

“The major inflationary problem is located in the commodities sector with the lack of energy, transportation and other resources,” Kemp said in a phone interview yesterday. “That inflation problem won’t go away until commodity demand falls.”

Gold erased two days of declines sparked by the U.S. saying it would back sales of as much as 12.9 million ounces of gold by the International Monetary Fund. Central banks in China or India may absorb the sales, U.S. newsletter editor and trader Dennis Gartman wrote in a report yesterday.

Silver is up 70 cents this morning to $19.46 an ounce, the highest since October 1980.

Written by Ernie · Filed Under Gold News