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2008-12-06 06:27:50 |
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Commodities plunge; gold's worst weekly loss
The policy agenda currently in vogue is to maintain the leverage and the asset prices by shifting all that debt from the private sector to the public. Why are we doing this? Because the near-term political heat from a deep recession and re-pricing of assets is more than any of our leaders can handle. Eventually that massive intervention and concomitant increase in the money supply will come with a hefty price tag.
Anna Swartz, co-author with Milton Friedman of "A Monetary History of the United States," addressed that question in a recent Barron's interview. She speculated that the deflationary impact of collapsing credit will be offset by the inflationary momentum of liquidity currently flooding in from the Federal Reserve and the Treasury. Pulling off that balancing act would be the central banking tour de force of the modern era.
We wonder if working that delicate arrangement isn't perhaps riskier than simply allowing the short and harsh brutality of the market to work its wonders of creative destruction."
Gold continues to track the Dow for the time being, and it remains caught in the bigger spiral of falling asset prices. At this point, the price tally points towards its worst weekly loss since 1983, and towards 2008 ending up as the first yearly loss it experienced following seven straight years of gains. None of this changes its role as the insurance anchor it ought to be in a portfolio worth protecting. It does, however, bring into focus the questions of what happens to it under conditions it never really faced in previous times.
A weekend to think during.
Jon Nadler is Senior Analyst, Kitco Bullion Dealers Montreal
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Crude oil futures continued to trade down in mid London trade Friday as the US dollar strengthened against the major currencies apart from a dip in the global equities. |
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Gold futures fell in negative zone as dollar gathered some strength in mid London trades. Dollar typically strengthens when there are less data releases from US. |
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MCX Comdex was up by 2.35% to 2694.17. MCX Energy was down by 0.22% to 2651.55, MCX Metal was up by 3.70% to 3226.02 and MCX Agri was up by 4.84% to 2255.10. |
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| Technical Calls |
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Gold can touch $1,225 per ounce by next week |
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What Eric is saying here also lies in the shortening of the steps in the stair step gold action. At new highs, such as now, this formation is a rare set up suggesting an exponential rise.
Rev. Doug, who is no slouch when it comes to gold, anticipat |
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Gold price will double $1,150: Jim Rogers |
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The most bullish investor on gold these days seems to be the global commodities investor Jim Rogers. Rogers, based in Singapore, and a big investor in the Chinese commodities market says, gold price should double the current $1,150 per ounce level. |
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Gold price to average $1,140: Barclays Capital |
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Barclays Capital says gold prices will average $1,140 per ounce in 2010, says Barclays Capital. "We expect prices to maintain their upward momentum through to at least the first half of 2010, where we expect prices to average $1,140 in the second qu |
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