Daily Commentary

Oil Reaches $120 a Barrel

Gold and silver are both higher with gold breaking out above $880 an ounce.  This suggests that the corrective process may have run its course.  With gold at these levels there is a good likelihood of it moving into a test of $905 an ounce.  Gold needs to hold above this $880 level for a few days to confirm that.  This week the European Central Bank did not sell any gold.  That is a positive indicator that suggests central bank gold sales will be considerably lower this year than last year. 

The dollar is weaker again today, down 21 basis points at 72.98.  Oil reached a high of $120.93 a barrel.  It is currently trading up $.60 at $120.57 a barrel.  Goldman Sachs said they see oil reaching between $150 and $200 a barrel this year.  David Tice of the Prudent Bear Fund and Thomas Winmill CEO of the Midas Fund said they see oil prices rising to $150 plus a barrel this year.  Moreover, they said gold is likely to reach $1,200 an ounce by year-end.  Winmill said he looks for gold to trade in a relatively narrow $50 range this quarter and then begin moving up aggressively in the third and fourth quarters to a high of $1,200.  That is consistent with Ross Norman's forecast.  Norman has been the single most successful forecaster of gold prices over the past seven years.

Martin Feldstein a noted economist said he believes the economy has not yet moved into recession but that it will over the next few months.  He says that home prices may correct another 15% to 20% this year.  That would be disastrous for the banking system and the financial sector.  In fact, Fannie Mae reported an enormous loss of $2.9 billion quarterly today.  This is one of the two organizations that members of congress have been pushing to take on more of the bad CMO obligations.  They are losing money themselves and yet the Fed and other government officials want to allow them to have greatly expanded lending powers and the ability to guarantee even larger amounts of loans.  Clearly, this demonstrates that there isn't a lot of common sense in Washington today.

There are also significant rumors that the U.S. Military is planning surgical strikes against training camps in Iran.  If this were to occur it would escalate the tensions in the Middle East and could result in the closure of the Strait of Hormuz.  This would drive oil prices to extraordinary levels as forecast by Goldman Sachs and others.  Rumors are also afoot that Iran and perhaps other oil producing countries have filled tankers to capacity and sent them out to open sea where they will be beyond the Strait of Hormuz.  It is expected that if there is conflict between the U.S. and Iran that the Iranian Navy will close the Strait of Hormuz.  This would dramatically reduce oil supply and cause an enormous spike in oil to the $200 level. 

All of these factors are extremely bullish for gold.  That is why investors should be accumulating gold and silver assets while they remain at these bargain basement price levels.  It is very clear that if oil rises to those levels we are likely to see gold move above $2,000 an ounce.  In fact, at $2,400 an ounce, gold would still be very cheap.  With $200 barrel oil, the 38-year ratio between oil and gold is 17 to 1.  $200 a barrel oil would therefore likely result in gold at $3,400 an ounce.  The upside potential is enormous and whether those kinds of targets are achieved or not, there is an outstanding investment opportunity with gold and silver.  In addition, they traditionally provide protection against inflation and protection of purchasing power.  The Wall Street Journal says, "Inflation is the thief of the thrifty middle class".  Our savings are being destroyed by inflation that is being created by the Federal Reserve and government beaurocracy. 

These are some of the many reasons why investors should be accumulating gold today.  Call Goldline today and ask them to explain the features, benefits and cost structure of the various gold and silver assets 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, will need to select assets that have some collectible value, as this program is not available with the bullion assets.  With the program you are given a two-week window of opportunity in which to re-price your transaction in the event of a correction.  This has proven to be a valuable asset for many investors.  It is one of the many reasons why investors have been seeking out Swiss 20 Francs, Gold Double Eagle Silver Dollars and other assets that have the Price Guarantee Program available to them.  In addition, when you acquire 29 Swiss 20 Francs you receive the 30^th for free.  Call Goldline today to learn how you may take advantage of these opportunities at 1-800-827-4653.

To receive the free information package, which contains valuable and important quotes from many responsible sources including forecasts for oil to reach over $200 a barrel and for gold to reach extraordinary levels, call Goldline.  You will also find some helpful information that recommends that individuals stock up food in their pantry rather than keeping savings in the bank.  They say this because inflation is reducing the buying power of the money in the bank while food prices and gasoline prices are skyrocketing.  You will also receive a Coin Facts Risk Disclosure Booklet, which will explain important facts you need to know before you make an investment decision.  Call Goldline now to receive this free information 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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