The headline reads: "Congress Pursues $80 Oil With Trading Limits, Disclosure Rules" - It is estimated that absent the fallout from aggressive speculation, the price of the commodity would indeed be nearer $80 per barrel. If that scenario were to materialize, then the perception offered by Ned Schmidt of the Value View Gold Report could have some interesting implications for the yellow variety of gold as well. The Washington Post brings us up to date:

How Long Can Gold Shine?

Financial crisis, slowing economy, rising inflation -- what a perfect recipe for a boost in gold prices and shares of gold-related companies.

And the bump has come. In the little more than a week since the Fannie Mae and Freddie Mac drama moved center stage, gold has climbed 3.2 percent, to about $958 per troy ounce Friday. Barrick Gold, the world's largest gold producer, has risen 1.2 percent since July 10, when the markets were hit by fears over the mortgage-finance giants. It closed at $47.30 on Friday.

So if the economic picture is darkening and inflation is on the upswing, gold will just keep on going, right? Ned Schmidt, publisher of the newsletter Value View Gold Report, offered a dose of skepticism. The uncertainty over the Fannie and Freddie shake-up does improve the long-term prospects for gold, Schmidt said in a report last week, and he remains firmly bullish on the metal. "That said," he cautioned, "the optimism on gold may be in need of a little dampening."

One measure Schmidt consults is the price of gold relative to the Standard & Poor's 500-stock index. The ratio currently shows the price of gold outpacing the S&P. By Schmidt's calculation, gold at $956 should equate with the S&P at a level of 810, far below its current reading of 1260. The numbers suggest that "gold may be ahead of the realities of the world," Schmidt wrote.

Schmidt lists more than a dozen stocks that have performed well in the past month, including Randgold Resources, up 30.3 percent; Kinross, up 18.3 percent; Barrick, up 17 percent; and GoldCorp, up 11.5 percent. "On average, the stocks have ceased to be a bargain," he said.

Excessive money is flowing into gold, Schmidt warned. "The current price is extremely overbought during this period of financial panic," he wrote. "Holding and gloating over your profits is appropriate at the present time. Buying should await lower prices or a crack in the price of oil."

Suppose we have to define 'crack' as the $20 lost since the peak or the $80 target envisioned by lawmakers. Hmmm... we would take $100 oil for now, and perhaps $3-3.50 gasoline. Active price gyrations will be the feature of the day, punctuated by possible dollar-related comments from Fed representatives. It still appears that the verbal variety of US dollar intervention is proving fairly effective and that it has thus far obviated the need to do so in real terms. Sell stops were the order of the day yesterday. Let's see what today brings.

Jon Nadler is a Senior Analyst with Kitco Bullion Dealers Montreal

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