GOLD SOARS ON FED ACTION, WEAKER DOLLAR

by Goldline.com | November 30, 2011

Gold prices surged on the New York Spot Market rising nearly $ as of 9:30 a.m. PDT. Investors acquired the yellow metal following the move by the Federal Reserve and six other central banks to lower the cost of existing dollar swap lines in an effort to create greater global liquidity. According to The Street, “The banks will lower the price on dollar liquidity swaps by 0.5% until February 2013, making it cheaper for other countries and banks to trade in their local currencies for dollars and fund their operations including loaning cash to consumers and businesses.” Commenting on the move, macro and consumer strategist Richard Hastings said:, “Gold has a special talent for sniffing out these imbalances," says Hastings, "as long as this continues gold will continue to rally." (The Street, 11/30/11)

U.S. stocks also moved higher after the central banks' move lifted investor sentiment and provided hope that world leaders could avoid a credit crunch and stem the sovereign debt crisis. "It's the first time we've seen this type of global coordination since November 2008," said Michael James, a senior equity trader at Wedbush Morgan. "The degree of coordination sends a message to the markets that global leaders are going to do whatever they need to do to instill confidence in the markets." (CNN Money, 11/30/11)

Morgan Stanley announced it prefers exposure to gold, silver and livestock in the coming year according to The Economic Times. "Given the low growth environment, we do not feel it is prudent to be long on the commodity complex indiscriminately," analysts Hussein Allidina and Peter Richardson said in a research note dated Tuesday, November 29. (The Economic Times, 11/30/11)

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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