« Ernst & Young Predicts Challenging Season for Retailers. | Main | Black Diamond With A Curse. »
Big Funds Push Gold To-18 Year High! Silver & Platinum UP!
Gold touched 18-year highs yesterday as surging commodity prices signalled accelerating inflation across the world.
Big funds drove the price of gold to modern records in all major currencies, reaching $471.40 an ounce in London before falling back slightly on profit-taking.
Ross Norman, head of TheBullionDesk, said gold had lagged base metals and energy resources in the current commodities boom but is now catching up as investors begin to suspect that the world's central banks are responding to the oil shock "the lazy man's way" - by yielding to creeping inflation.
"The mindset has changed. The big funds are buying into strength and holding. We've broken through very important chart points and there are now prospects of $600 next year," he said at a Dow Jones-AIG event.
Of great interest but little noticed is the fact that Copper and Nickel have increased over 200% over the past two years, driven by surging industrial demand in China and resilient US growth. Oil fell slightly yesterday to $64.32 a barrel for Brent crude in late trading after OPEC ministers pledged to raised output by 2million barrels a day, but it remains at levels viewed as unthinkable just five years ago.
Costly commodities have pushed US inflation to an annual rate of 3.6 %, reaching 5% over the past six months. Interest rates are barely keeping pace even after the US Federal Reserve's 1/4 point rise to 3-3/4% yesterday - an ultra-lax stance heavily criticised by the Bank of International Settlements.
In Britain, inflation reached 2.4% in August, the highest in eight years. With the M4 money supply still ballooning at 10.2% a year, there are concerns that inflation may burst through the Bank of England's upper limit of 3% this Autumn.
Analysts say the 13% rise in gold since May is different from earlier rallies in its four-year climb back into favor. Previous surges largely reflected weakness in the dollar, leaving gold almost static against the euro.
Almost unnoticed but of tremendous significance during this latest surge of Gold has been the very strong price increase of Platinum, now selling at $929/0Z.
Silver, the poor Man's Gold, is quietly moving up as well...now selling at $7.29/OZ.
As we have mentioned in the past days these price surges in the Precious Metals coupled with worldwide economic inflation, Oil, and the slow recovery from Katrina, will increase prices for consumers on diamonds and jewelry during the upcoming Holiday shopping season.
