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This page archives the December 2007 links to gold articles featured in our popular NewsGroup e-mail service.

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December 23rd: Gold Forecast for 2008

Gold Forecast for 2008
Michael J. Kosares - USAGOLD - December 23, 2007

"Some might say I am pressing my luck by publishing a prediction for the 2008 gold market after calling the gold price in the three previous years, and I truly did consider, and mentioned to friends, clients and staff, that this year I might rest on my laurels. However, the trends which have pushed gold to the levels we have all enjoyed over the past several years are even more firmly in place now than they were at any time since 2004. Thus, I am emboldened and find myself in my traditional place this time of year. . . .out on the limb."

USAGOLD Comment: Mr. Kosares sees $925 as a minimum target for 2008, with possibilities for a spike to $975-$1025 depending upon a surprise event or a deepening of some of the geopolitical elements that are presently underpinning gold.

December 12th: The Dollar Nosedive and the International Banking Crisis

On the heels of another reduction in interest rates yesterday from 4.5% to 4.25%, many are beginning to question whether or not the Fed's new monetary policy will really succeed in forestalling a domestic recession and end the credit crisis. More and more are concerned that the unintended side effects could impact the global economy on an unprecedented scale, causing a global recession, or even snowballing into an international monetary and banking crisis. Today's newsgroup focuses on several different articles dealing directly with the issue of whether or not a "measured" decline in the value of the US dollar will really end as positively as our policy makers hope.

Gold Gains on Speculation Fed's Credit Plan to Spur Inflation
Pham-Duy Nguyen - Bloomberg - December 12, 2007

"'Each dollar that's created devalues each dollar that's already in existence, and that's the definition of inflation,' said Michael Pento, senior market strategist for Delta Global Advisors Inc., which manages about $1.3 billion. 'This is excellent for gold because gold is actual money. Its purchasing power never really increases or decreases.'"

USAGOLD Comment: Gold initially reacted to the downside on yesterday's interest rate announcement as many felt a quarter point drop was an underwhelming response to the current climate. Today the Fed announced its new answer: "temporary reciprocal currency arrangements." Essentially, a new way of pumping liquidity into the system outside of the discount window. As the Fed elects to introduce new instruments for combating the credit crisis, the net effect will be inflation, which is undoubtedly good for the yellow metal.

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The Dollar Nosedive: Why America's Currency is the World's Problem
Der Spiegel - Spiegel Online International - November 30, 2007

"This could change if -- in the second scenario -- the subprime crisis continues to grow, possibly expanding into consumer loans. In this case -- when the "infection spreads," as a leading German banker puts it -- banks would be forced to make far more drastic value adjustments. Not only would this poison the spending climate, but it would also undermine foreign investors' confidence in the US economy. This in turn would lead to a far more substantial slide in the dollar's value, and probably a crash on the markets, which are still at surprisingly high price levels today."

"If that happens -- and this is the horror scenario -- the dollar will crash and, along with it, the international financial markets. Then the globalized world will be in a worldwide depression."

USAGOLD Comment: This is an incredibly insightful article, divided into seven parts. While an obviously in-depth read, those who take the time to study it carefully will not be disappointed. Taken from a predominantly European perspective, this article paints a more complete picture of the currency climate than most dollar centric pieces. It may very well be the most candid, well thought out study on the developing international monetary situation that I've read in months. And to say it makes a strong case for gold ownership would be an understatement.

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Adjustment or affliction? Why the dollar's drop is failing to rebalance the world
Chris Giles - Financial Times - December 10, 2007

"That could create a dollar crisis, pushing up both long-term interest rates and risk premiums on US assets and rendering its rate cuts much less effective than had been hoped in mitigating the economic slowdown."

USAGOLD Comment: This article offers a nice broad overview of the current dollar situation, much in concert with the first article listed above. To its detriment, however, parts of this article paint what I would call, "the most positive possible dollar outlook." Giles claims that, as a result of the diminishing value of the dollar, "US exports have become cheaper and, after quite a lag, are growing rapidly." This is obviously the number one intended goal, but as I read this piece, I was trying to figure out how Giles can make this claim at the same moment the October Trade deficit numbers came in yesterday wider than expected (article).

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Gold Prices will Zoom to Record Levels in 2008
Commodity Online - December 12, 2007

"'US interest rates will drop to three percent by the end of next year as the Federal Reserve takes measures to avoid a recession, taking the dollar to fresh lows against other currencies, she argued. If price doesn't rise to $900/oz it will be a great surprise. Such an interest rate cut may not in itself be sufficient to prevent a recession, which will see equity prices weaken. Gold could therefore benefit from this double whammy: lower interest rates and a rush from equities...'"

USAGOLD Comment: What would a USAGOLD newsgroup be without a bullish article on gold? Enjoy!

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