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Golden Recovery

July 14, 2008

For those that have written off the commodities market and especailly gold (like Mahendra) and been long on the US$, things ar not going well. As I’ve written for nearly a decade now, GOLD is on a bull run and it’s not over by any stretch of the imagination, though there can be serious seasonal hits from time to time. In the last few weeks gold has charged fro $850 to $975.

Who Wants Cheaper Auto Insurance?

When gold crossed over the $1,000 psychological barrier, I predicted that it would drop back under and go into a holding pattern, as you can read on this web site.

However, there are three things that cause gold to shine!

1-Inflation
2-The threat of war
3-Uncertianity of the financial markets.

So, it looks like we’re 3 for 3! And if we’re talking baseball the 3 for 3 are three home runs in three at-bats.

Inflation is going to DOUBLE and maybe more so this year over last. The price of oil is driving everything up, up, and away. The Fed has been pursuing an insane experiment fearing the slow down of the financial amrkets and in lowering eh rates as they have for so long, and so far (record breacking moves down), inflation will come back so straong and fast, the Fed can’t raise rates fast enough to hold it off.

The Labor Department reported that soaring costs for gasoline and food pushed inflation at the wholesale level up by a bigger-than-expected 1.8 percent in June, leaving inflation rising over the past year at the fastest pace in more than a quarter-century.

The threat of war is getting worse each day as the rhetoric between the US, Iran, and Israel keeps ratcheting upwards. Iran isn’t backing down form their nuclear plans and Israel isn’t going to sit by and wait til they have the weaker hand to do something. And it’s not going to be America who takes out the nuclear plants, but it will be with the US approval of course. Then there goes oil to $200+ a barrel and the price of a gallon of gas now into four digit atmosphere.

Then we have the financial markets! Wow! The second largest bank failure in US history. The rpediction that HUNDREDS of banks will go belly up this year alone. Fannie Mae getting slapped on the back side by Freddie Mac and Bennie Bernanke & the Feds scrambling to stave off a SIX TRILLION mortgage holding super mess!

And you think gold isn’t going north of $1,000 again? :-(

Written by Ernie · Filed Under Gold News 

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