Metals outperforming stocks in 2008
Gold up 9% while Dow falls 8% ytd
By David Bradshaw ~ links ~ wisdom
Editor, Real Money Perspectives ~ Daily email
Mar 31, 2008 ~ *news* ~ features ~ ((Podcast))
Gold prices ended the first quarter of 2008 with a 9% gain as investors sought safe havens from a declining dollar, rising inflation, the housing slump and ongoing credit crisis. Monday gold closed in NY down $15.20 to $915.70/oz., silver fell $.67 to $17.21/oz.
"The dollar headed for its biggest quarterly loss against the euro since 2004 after inflation accelerated in the EU, giving the region's central bank more reason to keep interest rates unchanged while the Fed lowers borrowing costs. The Euro has gained 8.2 percent this quarter," reports Bloomberg.
"U.S. stock indexes climbed Monday with equities snapping a three-session losing streak but the Dow still closed with quarterly losses of about 7.7%, their steepest decline in nearly four years," reports MW.
"Crude oil fell more than $4 a barrel in New York on signs that slowing economic growth in the U.S. will bolster stockpiles and curb demand. A government report on April 2 may show that U.S. crude-oil inventories last week rose for the 11th time in 12 weeks," reports Bloomberg.
"The Treasury Department proposed on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system," reports NYTimes.
"Treasury Secretary Henry Paulson defended his blueprint to overhaul the nation's financial regulatory structure Monday, saying that initial reviews that the plan amounted to less oversight of Wall Street were wrong," reports MW.
"Central banks will resort to full-throttle reflation, setting off a fresh boom in shares and gold, said Bernard Connolly at Banque AIG, who foresaw this crisis with uncanny accuracy. In the end, the whole industrial world will stoke a fresh credit bubble to put off the day of reckoning, for another cycle," reports London Tepegraph.
"In the past two weeks, the Federal Reserve has redefined its role to also become protector and overseer of Wall Street, eliminating a key form of self-regulation for investment banks," reports WashPost.
"The economy nearly sputtered out at the end of the year and is probably faring even worse now amid continuing housing, credit and financial crises. U.S. gross domestic product increased at a feeble 0.6 percent annual rate in the fourth quarter," reports AP.
"Sales of new homes fell in February for the fourth straight month, pushing activity down to a 13-year low. While the rate of decline has slowed, the worst slump in more than two decades has not run its course, analysts told AP.
"U.S. consumer confidence dropped to the lowest level since Richard Nixon was in the White House last month. The index fell to 64.5, a five-year low, from a revised 76.4 in February," reports Bloomberg.
"Gold will likely resume its upward march sooner than expected and we will likely see gold back near (nominal) record highs above $1,030 before the end of April," reports MarketOracle.
"Gold's appeal has returned to investors after the recent consolidation," said Swiss America CEO Craig R. Smith. "This was a healthy correction and a rare opportunity for wise investors to add gold to their portfolio. Value investors are buying gold to protect against future equity losses amid the ever-widening credit crisis on Wall Street."
"The current environment for gold couldn't be better. You have the Federal Reserve slashing rates aggressively and leaning on depression era loopholes in order to stave off a financial crisis, which it caused by slashing rates and expanding credit too aggressively in the first place," reports DailyReckoning.
"The 200-year commodity cycle, in which bull market upmoves have averaged between 17-22 years, is currently only seven years old. This bull market coincides with the fundamentals, reinforcing that commodities prices still have years to run," reports AdenForecast
"In the coming weeks and months, negative dollar sentiment will remain a key driving force behind gold's bull trend, as further rate cuts by the Fed will drive investors to stronger yielding assets," said James Moore, analyst at TheBullionDesk.com to Reuters.
"For ethically minded gold investors: Buy gold coins minted perhaps 50 or more years ago. The metal is just as valuable as any gold mined today, he says, and the premium paid for an aged coin can be recouped (at least in large measure) from another buyer down the line," Peter Schiff, CEO of Euro Pacific Capital told CSM.
"Experts also think that the recent gold price dip could have been triggered by buyer exhaustion. Many say they will not sell their gold holdings and will look into buying again, since the fundamental underpinnings for gold remain unchanged. They're urging investors to take the time to understand the gold market, before plunging in," reports CCTV.
"Financial pain is now unacceptable. Those in trouble demand to be rescued, and the government seems to agree that the "creative destruction" component of capitalism must not be allowed to do its work," reports MSN.
"After gold hit $1,000 for the first time ever, some analysts began warning of a correction. Still, gold watchers predict the metal will continue its upward climb amid fears that the U.S. is sliding toward or already in a recession, record-high crude prices and a weak dollar," reports AP.
"The U.S. Dollar Index, down 5.9 percent this year, rose 0.8 percent, the biggest gain in almost six weeks last week. Inflation concerns had boosted demand for commodities, sending the UBS Bloomberg index up 17% this year before today," reports Bloomberg.
"The dollar's sharp slide to 13-year lows against the yen and fresh all-time lows versus the euro on Monday stoked jitters about the possibility of joint central bank intervention to prop up the dollar," reports Reuters.
"It is unsettling to watch the world's reserve currency disintegrate. Commodities from gold to oil and wheat are taking on the role of safe-haven 'currencies'. The monetary order is becoming unhinged," reports London Telegraph.
After running nearly 40% since last August, gold finally consolidated, last week with prices pulling back 9% since the Fed rate cut last Tuesday.
"The severity of the moves in a range of markets suggested that funds were closing their most profitable trades in a scramble to raise liquidity," reports London Telegraph.
"It looks like investors are taking some money out after this great rally. The dollar didn't get crushed here. People were short dollars and long gold heading into this Fed meeting," reports Bloomberg
"The Federal Reserve slashed interest rates by three-quarters of a point to 2.25% last Tuesday, the latest in a series of moves by the central bank to try and restore confidence in the economy and battered financial markets," reports CNN.
"We remain bullish towards gold and anticipate the metal could test as high as $1,150 this quarter given the likelihood of further rate cuts this weeks as investors seek to offset rising safe-haven and inflationary concerns," said TheBullionDesk.Com analyst James Moore to CNN.
"Pushed to the brink of collapse by the mortgage crisis, Bear Stearns Cos. agreed to be sold to J.P. Morgan Chase & Co. for the fire-sale price of $2 a share in stock, or about $236 million after prodding by the federal government," reports WSJ.
"Value investors are buying gold to offset equity losses amid a bottomless confidence and credit crisis on Wall Street," said Swiss America CEO Craig R. Smith.
"A world addicted to easy credit must go cold turkey. Debt junkies, like heroin addicts, demand ever bigger fixes.The collapse of once-mighty Bear Stearns is another reminder that the unwinding of the Great Debt Delusion still has a long way to go and many more victims to claim," reports London Telegraph.
"Oil prices fell $4.17 to $106.04 a barrel on Monday, pulling back at least temporarily from record levels as investors feared that the forced the sale of Bear Stearns is a sign of deep economic troubles," reports AP.
"Financial markets are as close to collapse as I've seen in my career," said Chris Rupkey, Bank of Tokyo Mitsubishi on Tuesday.
"Gold needs no 'ratings agency' to clarify its value. Gold enforces discipline in financial markets. By attracting increasing sums of investment from other asset classes, such as asset-backed securities and other credit- supported issues, it transmits the absence of trust and the decline of those markets to its membership, causing a reordering of that universe to reflect an improved allocation of risk to such entities," reports SeekingAlpha.
"The reality is that Bear Stearns was carrying more than $28 billion in ‘level 3’ assets on its books at the end of fiscal 2007, versus a net equity position of only $11.7 billion. The company’s balance sheet was highly leveraged to many untradable and potentially worthless assets. When investor and lender confidence finally evaporated, it was this balance sheet that forced Bear to call the New York Fed," reports Fallstreet.com.
The dollar's freefall continued today with the buck hitting fresh record lows against the euro and falling below parity against the Swiss Franc for the first time in history. Investor confidence is shattering and sending investors running into safe havens like oil and gold," said Swiss America CEO Craig R. Smith.
"With gold breaking the barrier of $1,000 an ounce and surging over 40% over the last year, a growing number of investors that joined the fray are finally acknowledging that gold bugs' plans for apocalypse weren't so kooky after all," reports MW.
"Gold remains far below levels that are adjusted for inflation, with several analysts in recent months saying this figure would be closer to $2,400 an ounce. 'The thinking is that the Fed is going to jettison both the dollar and its concern about keeping inflation contained," said Edward Meir, an analyst at MF Global reports WSJ.
"Commodities may have 'explosive rallies' in the next couple of years, with crude oil rising to $175 a barrel, according to Goldman Sachs Group Inc.," reports Bloomberg.
"Trying to calm jitters about the economy, President Bush conceded that the country 'obviously is going through a tough time... these are uncertain times' but expressed confidence about a rebound in his speech on Friday," reports AP.
"People have realized that the central banks are going to have to ignore the inflationary risks to rescue the banking system," said Sean Corrigan, chief investment strategist at Diapason Commodities to Reuters.
The Fed is widely expected to cut its key lending rate between 1/2 and 3/4 point on Wednesday, which is sparking fresh dollar weakness because lower rates reduce the return on dollar-denominated assets.
Sadly, $1,000 an ounce gold means the dollar of the 20th century is now only worth two cents in the 21st century. Remember when a $20 bill and $20 gold piece had the same buying power until FDR recalled gold in 1933? We've come a long way baby!
"Gold is the only commodity over history that has served as a reliable store of wealth. I expect the Fed's monetary policy to send the U.S economy from a inflationary-recession to a hyper-inflationary depression over the next few years," said John Williams of Shadowstats.com to CNN(video).
"Turmoil in global credit markets may lead to the collapse of a North American bank, pushing bullion prices up to $2,000 an ounce as investors seek a haven in gold," said Eric Sprott, founder and chairman of Sprott Asset Management, which manages about $7 billion to Bloomberg.
"U.S. housing prices have further to fall, housing prices have fallen a third as far as they're going to go," said Richard Syron, chief executive of mortgage-finance giant Freddie Mac, reports MW.
Not even rising U.S. oil and gas inventories could halt oil's rise to $110 a barrel Tuesday, which helped send stocks lower and rendered Tuesday's Fed-induced rally a 'dead cat bounce'.
If the "Iranian-led jihad to destroy Israel, evolving from a nationalist to a religious war," as CBSNews reports ever erupts into war, oil prices may gush above $125 a barrel.
"What the Fed did Tuesday, injecting more money into this system, is very inflationary," said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. "Buy gold", reports Bloomberg.
"Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday. 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak," reports FOX.
"The Federal Reserve is ramping up efforts to provide more relief to cash-strapped financial institutions, a coordinated action with other central banks aimed at easing a global credit crises that threatens to push the U.S. economy into its first recession since 2001," reports AP.
"What is occurring is THE MONETIZATION OF BANKRUPTCY. The predictable result of monetizing bankruptcy is a significant increase in inflation and a sharply lower dollar. The result of a sharply lower dollar is sharply higher gold regardless of the dress up process being applied to the US dollar and gold today," reports JSMineset.
"This is not going to be enough, the Fed is still going to have to cut interest rates by 75 basis points next week," said Hans Redeker, currency chief at BNP Paribas to London Telegraph.
"The Fed is desperately pulling on levers. Each day brings more evidence of a system-wide credit breakdown. The Fed intends to stop the meltdown in the only way it can – by pulling on the lever of inflation; that is, by introducing more ‘liquidity’ into the marketplace," reports Daily Reckoning.
"Oil prices hit a record above $109 per barrel as dollar weakness triggered buying, extending a rally which has seen the price of crude surge around 15 pct in just one month," reports Forbes.
Goldman Sachs says $200 a barrel could be a reality in the not-too-distant future. "As the lack of supply growth and price-insulated non-OECD demand suggest a future rebound in U.S. gross domestic product growth or a major oil supply disruption could lead to $150-$200 oil prices," reports MW.
"Wall Street banks are facing a 'systemic margin call' that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages," JPMorgan Chase & Co reported to Reuters.
"As markets are now even more convinced that the US economy is in a recession and tensions in the financial system prevail, as hedge funds failed on margin calls, position liquidation might not only weigh on stock markets but also on gold," said Peter Fertig, research analyst at Dresdner Kleinwort to TF.
"Rebalancing your portfolio with hard assets can help insure the return OF your money and help you stop worrying about the return ON your money," reports Craig R. Smith.
"If history is a reliable guide, the recession of 2008 is now unavoidable. And if the good times really have ended, they were never that good to begin with. Most American households are still not earning as much annually as they did in 1999, once inflation is taken into account," reports NY Times.
"After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent," reports TheGlobe.
"In a bull market, strength begets strength and that seems to the driving force behind gold's repeated attempt to breach the $1,000 level. With all fundamentals intact and bullish momentum ticking consistently, gold should continue to gain in the coming days," said Pradeep Unni, analyst at Vision Commodities to Reuters.
Last Friday the Labor Department reported nonfarm payrolls fell by 63,000 in February, the largest drop since March 2003. The Federal Reserve announced steps to add cash to the bank system shortly before the data, saying it would bolster the amount of bank loans.
"Payroll news sent the dollar tumbling to a new record low of $1.5459 against the euro and left it weaker against most other currencies. The numbers provide the clearest evidence yet that America's deepest housing slump since the early 1990s is tipping the wider economy into recession as people cut back their spending," reports London Telegraph.
"The great gold bull has broken free of its chains. A strange and unprecedented union of forces has emerged. The US public is unaware of the great phenomenon that is playing out before their eyes. Somewhere ahead, the US public will enter the bull market," reports Richard Russell of DowTheoryLetters.
"If the reality of a collapsing dollar and foreign exchange turmoil starts to bite consumers where they keep their pocketbooks... the affects of currency misalignment could quickly move from the realm of dry treatises to the hyperactive world of live, televised political debate. It's time the candidates devote less time on the minutiae of configuring the next economic stimulus package... They should be thinking about how they will confront the imminent global currency crisis. It's the dollar, stupid." reports WSJ.
"Long-term dollar weakness is putting U.S. security at risk," Swiss America CEO told national radio talk show host Jerry Doyle on Wednesday. "Yes, military warfare leads to economic warfare," said Doyle. With regard to the trillions of dollars being held by China and Mideast UAE funds, "We are paying for the rope we may hang on," said Mr. Smith. Both agreed owning gold today is an important hedge against further dollar declines and offers excellent growth potential.
"While the debate continues regarding the so-called decoupling of the rest of the world's economy from the U.S., commodity prices appear to have left the argument behind. Base metals, precious metals, grains, oil and even orange juice prices are soaring to record highs, despite a steady drumroll of grim economic news emanating from the U.S.," reports FinPost.
"Crude oil may rise to $120 a barrel within six months due to the dollar weakness and global political tensions, the chief executive officer of Abu Dhabi National Energy Co. said to Bloomberg.
"Given the ongoing concerns towards the U.S. economy and the pressure this is putting on the greenback, it seems inevitable gold will challenge the $1,000-an-ounce level in the very near future as investors diversify towards stronger-yielding assets," said James Moore, analyst at TheBullionDesk.com.
"I think the rare coin market could outperform the bullion market in the years to come and I tried to make an argument for this in my book. I prefer physical gold over ETFs and my three favorite coins are Buffalo one-ounce gold coins, pre-1933 Liberty gold coins, and Morgan silver dollars," says Shayne McGuire, author of Buy Gold Now.
"Gold prices moved within striking distance of $1,000 an ounce Monday, surging to another record after the dollar tumbled to an all-time low and crude oil surpassed its inflation-adjusted high. Silver extended recent gains to reach another 27-year high, while platinum also rose to a record," reports AP.
"Gold, silver, platinum and palladium may be the best-performing financial assets this year as inflation and slowing growth erode the value of the world's major currencies, bonds and stocks," reports Bloomberg.
"The price of gold will continue its surge to as much as $3,500 an ounce. The dollar may have declined recently, but you ain’t seen nothing yet," said commodity guru Jim Rogers to the Asia Times.
In February gold prices gained over 5%, while silver prices jumped up over 14%. YTD gold is now up 15% and silver is up an amazing 27%. Can this commodity bull run continue? Keep reading and judge for yourself.
Cut 2007 taxes with a Gold IRA
"The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed," reports London Telegraph.
"Billionaire Warren Buffett said Monday that the U.S. economy is essentially in a recession even if it hasn't met the technical definition of one yet. "I would say, by any commonsense definition, we are in a recession," Buffett said on CNBC.
Inflation jumped in January, eating away almost all the increase in personal incomes, the Commerce Department reported last Friday. "It is a weak picture of the consumer," said Robert Brusca, chief economist for FAO Economics," reports MW.
U.S. gross domestic product increased just 0.6 percent in the fourth quarter, The Commerce Department reported Thursday.
"The economy skidded to a near halt in the final quarter of last year, clobbered by dual slumps in housing and credit that caused people and businesses to spend and invest more sparingly," reports AP.
"President Bush sees no recession, while Fed Chairman Bernanke sees no stagflation, but precious metal prices reflect higher inflation ahead," said Swiss America CEO Craig R. Smith.
"The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen. The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships," reports WSJ.
Alan Greenspan said near-record Gulf Arab inflation would fall "significantly" were the oil producers to drop their dollar pegs, in contradiction to Saudi policy. "Against a backdrop of inflation, high oil prices and low interest rates the debate over currency reform has to take on greater urgency," he said.
Gold is up 15 percent this year as a U.S. housing slump and turmoil in credit markets led the Federal Reserve to lower interest rates when commodities were rising to records. The dollar declined on speculation Fed Chairman Ben S. Bernanke will signal more rate cuts in testimony to Congress today," reports Bloomberg.
"Our fundamental view on silver remains bullish for the next few years, until we begin to worry about new mine supply from primary silver mines, as well as from byproduct silver from other new gold and base metals mines," said RBC Capital Markets analyst Stephen Walker to TF.
The producer price index climbed by 1% last month, the Labor Department reported Tuesday. The PPI had fallen 0.3% in December after having registered a jump of 2.6% in November. Core PPI, which excludes food and energy prices, rose 0.4%, reports MW.
Consumer confidence fell to the lowest level in more than 14 years, amid mounting concerns about jobs and slowing business activity. Meanwhile, U.S. home prices plunged 9.1% in 2007, according to a survey released Tuesday.
"Forget paper money and IOUs. Commodities are the world's new "currency:" Hard stuff like oil, grains, metals, gold. And that means America is financing the growth of our enemies, surrendering our long-term economic power for short-term oil-guzzlers and plastic toys," reports MW.
We believe gold and silver remain in the middle stages of a multi-year bull market as none of the fundamental factors driving prices higher have dissipated, indeed many are strengthening and becoming even more important – particularly the real possibility of stagflation," reports MarketOracle
. "The gold price is being underpinned by production losses and the continuing ‘managed’ devaluation of the US dollar. South African gold output is continuing to fall, exacerbated by the power problems being experienced there," reports Mineweb.
"I do not expect this cycle to peak at $1,000 an ounce gold, though the credit crunch may give it pause. The dollar price of gold has been moving in a long cycle, up from 1965 to 1981, down from 1981 to 1999, up from 2000 to 2008. Gold is a defense against inflation. In November the Americans will elect another inflationary president. That will be good for gold, but bad for the dollar," writes William Rees-Mogg at London Times.
"The fight against inflation is being sacrificed in G7 countries to avert the risk of recession and investors are likely to seek gold as an inflation hedge," said Mandy La Grange of Nomura, who forecasts gold to average $1,000 this year, reports FT.
The consumer price index increased 0.4% in January, driven by 0.7% gains in both energy and food prices. The government reports "core" inflation rose by .3%.
"We who eat and drive suspect government stats are rotten at the core. Worse yet, the real world rate of inflation is likely TWICE as high as reported," says Swiss America CEO Craig R. Smith.
"The dollar may fall to $1.55 per euro and 103 yen by June 30 as a deepening housing slump slows the U.S. economy, forcing the Federal Reserve to cut interest rates," according to Merrill Lynch Japan Securities Co. reports Bloomberg.
Dollar weakness typically benefits gold prices. The rising prospect of further Fed interest rate cuts virtually insures continued dollar weakness in 2008.
"The same oil price increases that make Arab rulers wealthy also are rapidly pushing the Middle East’s middle class toward poverty. Strikes, demonstrations and riots from Morocco to the Persian Gulf are becoming commonplace," reports Moneynews.
With platinum prices rushing above $2,100/oz., can gold be far behind? Gold prices historically have traded within $150/oz. of platinum prices during the last market peak.
Precious metals create investor confidence because they're not dependent upon Wall St., the Fed, nor any outside source to establish real value. The result is a continued flight to precious metals as the world's ultimate safe haven from economic uncertainty.
Recession or Stagflation lite?
The U.S. faces an unwelcome combination of looming recession and persistent inflation that is reviving angst about stagflation, a condition not seen since the 1970s," reports WSJ.
"Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson both acknowledged problems in the U.S. economy recently, but both said they believe the nation will avoid falling into recession," reports CNN.
This reminds your editor of the British economist who once said, "I never believe anything the government says until they officially deny it."
"Ben Bernanke indicated that policy makers are prepared to lower interest rates further to revive the economy as banks make it more expensive to borrow. The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," Bernanke said.
"Defaults in the US housing market are spreading from sub-prime to the much larger stock of top-grade housing debt, threatening to set off a wave of even bigger losses for banks and investment funds," reports London Telegraph.
American's confidence in the economy sank to the lowest on record in January, "amid heightened fears about shrinking job opportunities and the possibility the country is falling into recession," reports AP.
"This could be a secular bear market in stocks that’s painful for a long time. There will be fits and starts upward, there will be rallies. But over the next five years, the market will be dramatically lower than it is today," says David Tice of Prudent Bear Fund, reports Moneynews.
"A growing number of top economists believe that the U.S. economy has now toppled into recession. Alarm bells were set off Tuesday by a grim report on service businesses, which make up the majority of the U.S. economy," reports CNN.
"One of the key decisions of the G7 meeting was to allow the International Monetary Fund to sell some of its $92 billion in gold reserves. The gold price is probably the best and most visible indicator of just how nervous everyone is about rising inflation and rampant currency destruction, and right now it's screaming red alert," reports Moneyweek.
"So what should you do if the IMF does decide to sell? GATA says buy! ... I imagine it'll be a good buying opportunity for the rest of us," concludes Moneyweek editor John Stepek.
"If the IMF sells gold now, it looks very unlikely to dent gold prices. Indeed, "every time the IMF has sold gold it has actually triggered more buying interest," says Mario Innecco, a broker at MF Global in London, to Bloomberg.
"What has been lost to mainstream economics is the fact that this economic identity is severely disturbed by the kind of monetary policy well-intentioned monetarists and supply-siders promote. As always, the end result is recession," reports BrooksNews.
"The freewheeling days of credit and risk may have run their course — at least for a while and perhaps much longer — as a period of involuntary thrift unfolds in many households. Credit counselors are now swamped by calls not just from people of modest means, but from professionals earning six-figure incomes," reports NYT.
"The Fed wants to drive the DJIA toward the 8,000 level, or below, in order to help create a deep recession which will have the effect of slowing consumption across the board and dampening the otherwise harmful effects of inflation," reports WND.
The Dow finished with a monthly loss of 4.9% in January. The S&P lost 6.3% and the Nasdaq declined 9.9%.
U.S. coin & currency news...
"Perth Mint was first in the annual lunar coin scramble. The variety of lunar coins showering from Perth outnumber those of all other world mints combined. Each Year of the Rat inaugurates a new 12-year cycle. It was the rat that won the race to determine the order of precedence among the 12 animals of the Chinese zodiac. For those westerners of a somewhat sensitive disposition, it will be the Year of the Mouse," reports Numismaster.
"In the latest example that the U.S. dollar just ain't what it used to be, some shops in New York City have begun accepting euros and other foreign currency as payment for merchandise," reports Reuters. "The increasingly weak U.S. dollar, once considered the king among currencies, has brought waves of European tourists to New York with money to burn and looking to take advantage of hugely favorable exchange rates."
"It is hard to drown out the drumbeat of record bullion prices, but for a time, the news of the sale of an 1870-S silver dollar for $1.3 million proved that rarity, collectibility and desirability still have a place in the American coin market," reports Numismaster.
"The Professional Numismatists Guild has selected the Long Beach Coin, Stamp & Collectibles Expo as the site to launch a series of "Share the Knowledge" consumer education programs. The debut program, "Collecting U.S. Gold Coins," will be presented by authors Jeff C. Garrett and Douglas A. Winter at noon Feb. 14," reports NumismaticNews.
"To help celebrate its 26th anniversary of inspiring America to rediscover gold, Swiss America has just released a 2008 updated edition of A RARE OPPORTUNITY: GOLD 101, a new television special available on a FREE DVD hosted by Pat Boone. GOLD 101 covers all of the basics investors need before buying gold, including: four types of gold worth owning, five steps before buying gold, and six major forces driving gold prices higher," reports PRNW.
2008: Year of the Rat
"Forget about graphs, charts and economic forecasts. Wary investors in Asia are turning to feng shui masters to tell them which way the markets will head in the Chinese Year of the Rat," reports Reuters.
"The rat is a symbol of money to the earth industry ... Strong water element in the year indicates productivity and strong activity in the metal industries," said Raymond Lo, a feng shui master in Hong Kong who suggested investors put their money into property, mining and gold.
"Lo predicts stock markets will be soft this year as the elements of earth and water, which he says are strong in the Year of the Rat, weaken the fire element that influences shares."
Blast from the past ... "I would like to suggest that every American take a lesson from the Chinese "Year of the Golden Pig" in 2007 by starting their own personal golden piggy bank."
"Instead of viewing our homes as a piggy bank, we must diversify our resources into assets that will stand the test of time like gold and silver," said Craig R. Smith in December 2006. With gold prices rising 32% in 2007, it appears the Chinese were right on the money.]
"China became the world’s largest gold-producing country in 2007, replacing South Africa. In January 2008 China opened its first gold gold futures market in Shanghai, in response to its citizens’ zeal for gold," reports Forbes.
"Anything can happen from here"
"Gold may climb to $1,000 by the end of March," said Robin Wilkin, London-based head of commodities and currency technical analysis at JPMorgan Chase & Co. "It's hard to get overly bearish in gold because of the dollar," reports Bloomberg.
"Gold has enjoyed a great run over the past few years, but it hasn't been a straight path. But if you do your research, you can act with confidence that even if gold dips lower than you're buying it, the upside potential is huge. My preliminary price objective for gold is $1,065 per ounce, and it could go a lot higher than that," reports Investors.com.
"Anything can happen from here, including a rocket shot to $1,000/oz. gold over the next few weeks, which I consider to be a very good probability. We already have lift-off. Get ready for the rocket shot," writes James Turk's Freemarket Gold&Money Report at MW
"The price of gold is likely to peak at just over $1,000 per ounce in 2008. Gold is dancing to its own tune and not just being influenced by a weaker dollar," GFMS Chief Executive Paul Walker to Reuters. Walker estimated that investor demand was 12 percent of total demand for gold in 2007.
"The Gold Anti-Trust Action Committee (GATA.org) charges the U.S. government surreptitiously utilizes gold reserves to engage in international swaps and other market manipulations," reports WND. (listen to GATA founder Bill Murphy)
"The Fed is cutting rates to stimulate the economy, but times of crisis usually means investors head into gold," said Peter Hambro, founder of the second-largest gold producer in Russia to London Telegraph. Mr. Hambro expects worldwide stagflation to drive gold past the $1,000 barrier this year.
Quick-fix economic stimulus?
The U.S. economy slowed sharply in the fourth quarter, growing at a 0.6% annual rate, the weakest growth since the economy was pulling out of recession in 2002, the Commerce Department reported last week to MW.
"Democratic and Republican congressional leaders reached a tentative deal last week on tax rebates of $300 to $1,200 per family and business tax cuts to jolt the slumping economy," reports AP.
"Most single taxpayers would get $600 and most two-wage households would get at least $1,200. The deal includes an additional amount of $300 per child. A total of 116 million taxpayers will receive checks of some size," reports CNN.
"Government fixes will be temporary until the underlying structural problems are addressed and strategies are employed to work through those problems. It is time to allow kids to be kids, adults be adults and markets to be markets. If our markets are truly 'free markets,' then let them be free and they will fix themselves," writes Swiss America CEO Craig R. Smith.
"It’s hard not to believe that the economy will pay a price for the speculative binge of the last two decades, either by going through a tough recession or an extended period of disappointing growth. As is already happening, banks will become less willing to lend money, households will become less willing to spend money they don’t have and investors will become more alert to risk," reports NYTimes.
"The worst housing financial crisis in decades is only going to get worse, a Merrill Lynch report said Wednesday. The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010," reports CNN.
"While millions of investors face a potential panic on Wall Street, those wise enough to have put themselves onto a personal gold standard by owning gold remained cool, calm and collected, knowing gold is the perfect safe haven during financial storms such as this," reports Craig R. Smith.
"Forget rate cuts and stimulus packages. In Wall Street's eyes, the recession is already here and the credit crunch is far from over," reports CNBC.
More than three in four Americans believe the U.S. economy is already in a recession, or will be sometime in 2008. Only 19 percent of 1,000 Americans surveyed believe the nation will avoid a recession, while 57 percent believe that there will be a downturn this year according to a Fortune Magazine poll," reports CNN.
Gold Rush '08
"A Reuters global poll of 50 traders and analysts forecast gold prices surging more than 20 percent this year and gold retaining most gains in 2009 as dollar weakness, market turmoil and inflation fears stoke investor interest.
"Further credit events and increases in oil prices can create a 'spike' past the $1,000 level in the near term," reports London Telegraph.
"Gold prices will test a record $1,000 an ounce this year, boosted by growing investment interest, safe-haven demand and strong market fundamentals, a Citigroup metals analyst said.
"We believe gold has entered a new investment-driven phase. Catalysts are rotating from safe-haven demand, to currencies, to the re-flation trade, as new buyers enter the market," John Hill, director, metals research, at Citigroup in San Francisco," reports Reuters.
"The big lure to gold continues to be its tendency to hold value when the rest of the investment picture turns septic. As it's done of late, with U.S. inflation measures hitting multi-decade highs, U.S. stocks starting off the year with their biggest drop in 30 years and the global outlook looking both inflationary and at risk of a slowdown," reports MW.
"I’m convinced that in 2008 the world will witness a gold price explosion, propelling the shiny yellow metal into the next and perhaps most exciting stage of this bull market," said Swiss America CEO Craig R. Smith.
"If you have not yet taken action in acquiring a position in gold, you now have a golden opportunity to buy high quality U.S. gold coins at a historically low collectible (or extrinsic) premium, relative to gold's melt (or intrinsic) value," reports Dr. Fred Goldstein, Sr. Broker at Swiss America.
"Craig Smith and Swiss America have accurately forecast future trends of gold, oil and stocks over the last decade, and I expect his 2008 forecasts will be no different. Put your family on a personal gold standard this year so you're positioned to be protected and to prosper!" said Michael Savage, host of The Savage Nation.
"Keep in mind the price of gold would have to climb well above $2,100/oz. just to reach an inflation-adjusted new high. Therefore, gold has a long way to go. Suddenly the calls for $1,000/oz. gold now are almost a given," says Mr. Smith.
"We don't see any reason in this cycle why gold shouldn't reach its real all-time high, which is actually about $2,200 an ounce," said David Garofalo, CFO of Agnico-Eagle Mines, adding the time frame of three to five years." (Read 46 other experts forecasting $2,200 gold)
"The price of gold tells us a lot about ourselves. It holds up a mirror to the way we are governed, our economy and its prospects. It reflects not only the physical dangers of floods, famine, terrorism and war, but also the financial perils of systemic addiction to debt and budgetary incontinence," reports London Telegraph.
"Now that the inflation arm of stagflation is appearing through the political camouflage, gold is in strong demand and people are jumping aboard the golden coach. Gold provides an insurance policy against catastrophy. Therefore, stay with a high asset allocation to gold and buy on dips," reports John Browne at Moneynews.com.
"Ross Norman, director of TheBullionDesk.com, said the world faces a new era of "peak gold" in which discoveries become rarer, leaving the market starved of the metal just as demand in China and emerging Asia begins to gather pace. Mr. Norman, the top forecaster for the London Bullion Market Association over the past four years, said gold would reach $1,200 an ounce this year," reports London Telegraph.
"In the Middle Ages gold fetched nearly $3,000 an ounce in real terms. The price fell to nearer $550 when Spain flooded the world with Aztec and Inca riches, and there it hovered for three centuries. But the modern era has been an aberration. Supply is exhausted. Perhaps we should now regard the Middle Ages as the proper benchmark price. One thing is certain: Gold will outperform paper as long as governments keep increasing the global money supply 15 per cent a year," reports London Telegraph.
"When measured in 'hard money' terms, the U.S Treasury’s 10-year Note lost 20% of its value compared to an ounce of gold since August 2007. Wouldn’t it make better sense to park excess cash in gold, rather than U.S Treasury IOUs, during periods of double-digit money supply growth and soaring commodities?" asks Gary Dorch, editor of Global Money Trends.