Posted on 04/17/2006 11:18:47 AM PDT by DebtAndDelusion
Gold bugs' only problem on Monday was trying to find which of a myriad of bullish factors to pick to explain yet another move to fresh 25-year highs. The usual suspects -- inflation, geopolitical tensions, and a weak dollar -- were all present at the open of trading after a three-day weekend.
Most visibly, crude oil topped $70 a barrel amid heightened concerns about Iran's nuclear ambitions. In recent action, crude was gaining 68 cents to trade at $70 a barrel.
Gold for June delivery was recently up $13 at $613.80 an ounce, off an earlier 25-year high at $614.30. Other metals were following gold's lead, with silver rising 38.5 cents to $13.24 an ounce, off a 22-year high of $13.33. Copper was recently up 7.35 cents at $2.89 an ounce, after hitting yet another all-time high at $2.93.
Ali Larijani, Iran's National Security Council Secretary, said Western requests that Iran stop its nuclear-enrichment program are "illogical," according to Iranian news agency ISNA.
The standoff between Iran, the world's fourth-largest producer of crude oil, and Western countries has sparked concern over supply disruption. Crude oil prices are at levels unseen since last September when Hurricane Katrina disturbed Gulf Coast production.
Gold's surge so far this year has been fueled both by rising geopolitical tensions, as the precious metal serves as a safe haven, and by the inflationary pressures from surging energy prices, as gold also acts as a hedge against inflation.
Other metals have mostly followed gold's lead, but with their own twists. Silver has been surging even more amid expectations that a soon-to-be-launched exchange-traded fund (ETF) will boost demand for the metal. The fund, much like the streetTRACKS Gold (GLD:NYSE - commentary - research - Cramer's Take) ETF, should make investing in the commodity easier for retail investors.
The rants of the anti-gold forces on this forum are hilarious. "Doesn't pay interest, bought at $850 in 1981 lost money, has no value," etc, etc. I don't even want to start talking about silver.
Gold is still dirt cheap. There will be days when it goes up fifty dollars in the coming months. The Chinaman has his belly full of dollars and he wants gold -- now.
Those darn Asians are buying all the gold!
HG
Most of this is driven on the cost of oil which continues to rise based on speculation that Iran will be attacked.
Yep. That's why I got into the silver market back when it was at $7.90/oz.
The more the dollar sinks, the better my silver does!
When gold went from the $400 range south to the $200 range, the middle eastern countries were buying up all that the western countries central banks could sell off.
Now they are sitting pretty with lots o' gold and high oil prices.
Do you buy gold stocks, shares or the actual gold? I have resisted buying gold. Fortunately, other hard assets like real estate have done great. I remember when gold hit 850 and silver $40. I think this run up is tied more to the dollar and our deficit, along with failure to reform social security. Of course bombing Iran would likely cause a run up.
That's what's keeping real estate prices high, also.
I just sold CGM at 618. We are running up against a couple of apexes, not to mention the cycle high that is due in the coming week. I have been long since 503 with the exception of 567 thru 575. We could experience a pullback here. No doubt it is nothing more than the FIAT US $ going to hell in a hand basket.
Buying major miners or the juniors is not something I'd do if I didn't have a lot of experience. Physical is nice to hold if you have some place to store it, preferrably a home safe.
You can also buy gold on the ETF GLD. The silver ETF should be opening soon (maybe) and will be SLV.
You can also do options and warrants but again, know what you are doing.
I'll buy more PM's on the next shakeout.
There may be a bit of a pullback tomorrow, then probably gold and silver will hop on the elevator and go up. I expect a major correction around the end of May, however.
I had a friend that lost his shirt buying commodities futures. Options are not as risky, but I would prefer some kind of share or actually possessing the stuff.
Whatever. I'm just happy to be up almost 50% on my original investment, regardless of 'why?' !!!
How I made $125 Trading Index Options in Just Twelve Months.
Wow, 34 cents a day. You must have sold millions of books.
However it is Barclay's not StreetTRACKS that is putting the Silver ETF forward, so it will probably be called IAG (if that is not taken already) as AU is the periodic name for gold and AG is the periodic name for silver.
The run up in the silver price is based on speculation on what the ETF will do.
Some gold held by GLD:
How to Retire Wealthy Writing Books About How to Retire Wealthy.
Measuring everything in gold is an interesting mental exercise. For instance the price of oil has not gone up much in the last year in gold. (That alone makes it a useful hedge for many businesses which again has driven investment in the ETFs).
"Measuring everything in gold is an interesting mental exercise..."
Try this one: DOW gold ratio 1:1 or 1:2. Some believe it is coming.
Oh, man. That would be a backing up the truck moment.
Yes and no. The value of money is more accurately measured by goods you can buy with it. Since inflation is realitively low and the dollar is doing well against other currencies, it is hard to make a case that the dollar is falling like a rock. Gold has just been undervalue for many years, and it is finally regaining its luster. I am not sure why gold bugs always try to sell gold based on doomsday economics. Gold could hit $750-$800 this year, but that does not mean the dollar has dropped 25% or that the economy has tanked. I think the dollar will remain strong, the economy and the stock market will have good years, and the price of gold will continue to go up.
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