Lower Dollar Drives Gold Upward
by Joe Battaglia
Posted: April 16, 2008
Gold rose $16 in
early trading and silver is up $.54 in reaction to a weak dollar. The dollar falling 66 basis points to 71.36
on the index. Oil reached a high of
$114.53, and then pulled back on profit taking to $113.54, down $.25. The dollar has fallen to a new record low
against the euro. That is the key
factor that is driving gold higher. In
addition the economic statistics are uniformly weak. That too tends to weaken the dollar and drive gold upward. The consumer price index rose 0.3% in
March. Those numbers are significantly
manipulated to the point where even financial television talk show hosts are
commenting that the numbers simply bear no relationship to reality. Yesterdays PPI inflation number indicated
inflation running at 6.9%, year over year.
Even that number is low.
It was announced
that credit default swaps have swelled from $45 trillion to $62 trillion as
banks and investment bankers attempt to hedge risk. The big problem is that these are totally unregulated over the
counter derivatives. Many of the
counter parties are incapable of meeting their commitments. If this market unwinds it will make the
sub-prime mortgage crisis look like a walk in the park. Bill Gross of Pimco said, "Commodities,
whether it's gas or food, on a world wide basis are becoming (structured) in
terms of their increases and so the old Fed approach in terms of the core is
really just an excuse to maintain an easy monetary posture." That translates out to the fact that
inflation is significantly higher than the official numbers suggest. It further suggests the Fed is continuing to
aggressively inflate in an effort to defend the banks and financial
system. The one thing that the CPI
numbers do is to allow the Fed a freer hand to ease interest rates and expand
money supply. We can expect them to
continue to do so aggressively because the problems in the credit and banking
systems are not resolved. May through
December will probably see the largest number of foreclosures in history.
In this environment
investors have an imperative to own gold.
That is why we see gold moving up nicely. This morning gold broke
through the $940 an ounce resistance level.
If that level holds through the close, then we can reasonably conclude
there has been a breakout above resistance and the metals will push upward
again. However, this $940 level could
be tested for a few days. I think
investors should have some diversification into precious metal assets. It is a proper way to diversify your
portfolio. This would be especially
true with record oil prices, record lows for the dollar, and other similar
factors that underpin this market. The
falling dollar means higher inflation and everyone knows gold rises in an
inflationary environment.
Investors should
call Goldline today to get started at 1-800-827-4653. Ask them to explain the features, benefits and cost structure of
the various gold and silver investments that are available to you. Select those that best meet your own
personal and individual investing needs and objectives. Investors looking for low transaction costs
may wish to consider bullion assets such as Krugerrands, Canadian Maple Leafs,
American Eagles, Silver Bags and Silver Bars.
Investors who would like to take advantage of Goldline's Price Guarantee
Program, which gives you a two-week window of opportunity in which to re-price
your order lower in the event of a correction, may wish to consider assets with
collectible value as this program is not available with bullion assets. Swiss 20 Francs qualify for the Price
Guarantee Program. When you acquire 29
Swiss 20 Francs, the 30th is free.
When you invest $6,000 or more in qualified assets you will receive free
shipping. There are excellent
opportunities here for investors to get started today. Call Goldline at 1-800-827-4653.
To receive the free information
package, which includes the company brochure along with independent third party
source articles and quotes from major banks and brokerage firms and a Coin
Facts Risk Disclosure Booklet, which you should read carefully before making an
investment, call Goldline at 1-800-827-4653.
Investors should be mindful that past performance does not guarantee future results. Transaction costs are generally 5%
to 7% on bullion and 30% to 35% on coins. This is also referred to as the spread, or the difference between the buy price
and the sell price. The market must go up enough to overcome this spread before an actual profit is achieved. All markets go
up and down. Coins are a long-term, three- to five-year investment, suitable for 5% to 10% of the average portfolio. Please
see Goldline's Risk and Disclosure Statement for further details.
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