Is Mediocrity or Self Interest Driving the Markets?

December 2, 2007 | By | Reply More

Gold finished the week some $42 an ounce down on the week as the dollar held on to its gains.

 

With strong hints of a further rate cut emanating from the Fed that in theory should strengthen gold, it seems that profit taking and balancing the books as the year approaches its end is responsible.

 

It has been a feature of the gold seesaw that it has followed the pattern of the oil price for a considerable time although the justification for this is tenuous to say the least.

 

Nevertheless crude oil futures ended the week’s session below $90 a barrel so clearly traders in gold were also influenced by the pullback in crude.

 

 

With both the US and UK economies being managed by political placemen whose mediocrity is only surpassed by the political leaders who pull their strings, it can only be expected that any short term solution to give their economies the impression that all is well will be taken.

 

The resultant effect on inflation and their currencies may be put off for a while but the longer it takes before the inevitable the harsher the consequences for the multitudes.

 

Sad to see that the EEC has taken its cue from the US and resorted to an even greater reliance on the money printing presses to provide liquidity to save doomed collateral.

 

It is our strong opinion that it is absolutely necessary for the US in particular and the other western economies to say enough is enough.

 

Stop printing money as if there was no tomorrow and that already has let inflation out of its cage to start its rampage through the streets.

 

Raise interest rates despite the pleas and threats of the Wall Street types that add so much dough to party campaigns and jobs for out of work politicos on both sides of the Atlantic until inflation is contained.

 

Only sleaze can justify the present short term thinking and to hell with the man in the street and his descendants who through no fault of their own will not evade the consequences of Messrs Bush, Blair and Brown lack of backbone and overwhelming desire to feather their own nests.

 

We doubt that our plaintiff cry will be heard let alone acted upon so we will continue to put our faith in gold and put our money where our mouth is, and around $780 an ounce is as good as it is likely to get, but that is just the opinion of an ignorant scribe who has no more than an ear to the ground.

 

Who knows what our politicians will come up with next to delay the inevitable, or maybe a white knight will appear that will come up with a solution that will make everything hunky dory and create no financial pain!

 

Turning to the broader precious markets, platinum, palladium and rhodium finished the week down as they kept to their habit of following the price of gold.

 

Interesting that Comeco, the world’s largest producer of uranium, has linked with a state run Russian company to find and mine the yellow cake. Russia has plans to build 25 nuclear reactor plants by 2020. Another plus for getting into Comeco?

 

Opinions expressed in this article and elsewhere on this website should not be construed as recommendations to trade.

 

Our hope is that they will be thought provoking and encourage our visitors to dig deeper and then act on their own conclusions.

 

Your feedback, which we may publish, is important to us and will be treated with respect whether or not you take issue with our opinions.   

 

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