Daily Commentary

Fed's Decision Awaited

by Joe Battaglia
Posted: October 25, 2006

Everyone is awaiting the decision of the Federal Reserve this morning. The speculation is that the interest rate won't change. However, the Fed statement as to its bias is going to be the key to the markets today. Of course, the gold market will already have closed in New York and be trading on the electronic aftermarket. If the Fed maintains its policy statement the same, then it is likely that gold will remain range bound. If the Fed indicates that it is going to raise rates ahead, it would be considered a slight negative for the gold market. If they indicate languages that would suggest that an interest rate cut lies ahead, that could be positive for the gold market. My own view is that we should expect a neutral statement, which will not have a significant impact on the precious metals. Gold is trading down $3.60 near the open, and silver down a nickel. That isn't significant and keeps both metals well within their recent trading ranges.

Oil is up 20 cents at $59.55 a barrel, and the dollar is slightly lower, down 3 basis points at 86.60. One analyst told the Dow Jones Wire Service that gold has been weighed down by the flight out of bonds and the attractiveness of the equity market. In fact, it has affected all commodities, which have demonstrated weakness, according to HSBC Bank analyst James Steel. However, he says oil may rally and stock market gains may slow, allowing gold and other precious metals to rally. While a breakout to the $700 level looks less likely at this point,
Goldfields Mineral Services continues to see a move well above $600, perhaps into the $650 range over the next couple of months. Next year, most of the analysts continue to see gold making a move into the $800 range. Gold is well supported by demand for physical gold from India, China and Asia. From a technical point of view, gold and silver both seem to be building strength. One analyst told Dow Jones Wire Service that gold and silver's stronger finishes yesterday after weaker starts could be a "strong sign" going forward. He said, "It might be we will soon see a breakout, we just need to break out of a triangle pattern in silver and gold." Groenewegen remains longer term bullish, noting that mine production is not being replaced with new discoveries. He also cites a number of other factors, including seasonal demand, the North Korean situation, and an expectation that the dollar eventually will soften, along with producer de-hedging, as factors supportive of the gold market.

In view of the comments of many analysts, I think that there is a great opportunity now to acquire gold ahead of the breakout above $600 an ounce. Investors who take advantage of this opportunity will probably be significantly rewarded over the longer term. Certainly analysts like Jim Rogers, one of the most successful investors in the world, along with Goldman Sachs, Citigroup, JP Morgan and others, are not likely to all be wrong in their forecast that gold is going substantially higher and probably above $800 next year. Therefore, smart investors will take advantage of the opportunity to get into the market today. Acquire Swiss 20 franc gold coins, which have many features and benefits that investors appreciate. Acquire 29 of them and the 30th is free. Others may wish to acquire the $50 gold Buffalo coins. Goldline still has a few of the first strikes available in mint state 69 condition. However, 92% of their allocation has been sold, so you should act quickly if you're interested in acquiring one of these beautiful coins. Silver should also be a part of your portfolio. You may wish to acquire silver half dollars, silver Eagles, or other forms of silver assets that may be attractive to you. Call Goldline now to get started at 1-877-341-2646. To receive the free information package, including the articles quoting Goldman Sachs, JP Morgan, Citigroup and other prominent analysts, call 1-877-341-2646.

 

^{You should carefully read Goldline's Account and Storage Agreement and our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider. These provide important information that you should consider before investing in precious metals. Goldline's spread, which is the difference between the price we sell our products and the price we buy them back, generally ranges between 5% to 20% on our most common bullion products and 30% to 35% on all other products including our popular semi-numismatic coins such as the European francs, proof coins and graded coins. The market must go up enough to overcome this spread before an actual profit is achieved. All markets go up and down. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average portfolio though others may recommend a different percentage. Please see Goldline's risk disclosure materials for additional information.}

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