Gold Trading Over $900 | Next Stop $1000 An Ounce?

May 19, 2008 | By | Reply More

Early morning European trading, (10.00 am CET) saw gold trading at $910 an ounce, comfortably above its Friday close of $901 an ounce.

We have been waiting for the psychological, as well as the resistance, barrier of $900 an ounce to be breached to get back into buying mode.

Our only reservation is that the price may be too tied to the surging price of oil and if that pulls back then gold is very likely to turn down. In that event the question is will it hold steady above $900? If so we think that will signal the renewal of strong bullish sentiment. 

 

We will wait to see how the US market performs today and whether the illogical strength of the Dow, S&P500, etc., is maintained.

However much the inflation figures and other keynote statistics are massaged, it can only delay the inevitable day of reckoning.

The US consumer is under ever increasing pressure to maintain the life styles they have enjoyed for so long.

At the end of the day it is those businesses that do not have a strong overseas presence that will drag down the US stock markets with the consequent roller coaster effect on other Western markets, particularly in the fragile UK economy.

The technical outlook for silver continues bullish with support holding steady in the $16-16.50 an ounce range and can be expected to break out of its sideways pattern if and when gold makes its upward move.

Both metals enjoyed a positive week in the East with the Indian buying season under way.

A bill has passed the US Senate and is awaiting the Banking, Housing and Urban Affairs Committee to mint a $20 coin from domestically produced Palladium.

The only mine in the US producing the precious metal along with platinum is Stillwater Mining Company (SWC:NYSE), based in Montana and currently trading around $14.90-15.00 a share.

Food for thought!

Pressure on the Australian Government to lift bans on Uranium mining continues. The country has rich deposits awaiting development and along with other plentiful mineral resources the country’s future economic prospects look increasingly promising.

At the inaugural Platinum Group Metals conference held in London on Friday a leading analyst stated that the industry was in difficulties due to electrical supply problems, increasing capital requirements and operating costs and skilled labor shortages at a time of growing world demand.

If so we can only conclude that platinum and other PGMs are still a buy. Have a look at the two platinum ETMs (exchange traded metals) launched in New York last week.

If we had a reservation it would be that unlike the gold and silver ETFs that hold the physical metal, these newcomers only deal in platinum futures, i.e. a promise to deliver in the future.

That may be off putting to those investors that prefer the conservative approach of buying actual assets.   

 

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