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USAGOLD NewsGroup Archive
January 29th: $1000 Gold
Irrelevant?
With another interest rate
cut due in the next couple of days, is $1000 gold a virtual certainty?
While it would be easy to put up a laundry list of articles predicting
that potentiality, we thought it might be more beneficial to
go a different route with today's newsgroup. The Fed's emergency
intra-meeting rate cut last week of 75 basis points has been
called "reckless" and at best "reactive"
by economists and analysts alike. It has become increasingly
clear that the market is dictating Fed policy, rather than vice
versa. Language of the "Bernanke Put" has made its
way back into financial vernacular as the liquidity minded fed
chairman has shown favoritism toward investors, by using rate
policy to slow losses in equities. But will this easing really
be successful in staving off a recession? Should more have been
done years ago to quell runaway asset price booms borne from
subprime lending? Are the Fed's actions now just feeding another
bubble? Is it too little, too late? In looking at these deeper
problems, gold eclipsing the $1000 level becomes increasingly
irrelevant. Price as a whole becomes irrelevant. It is the need
to protect one's assets that is of greatest relevance, and that
alone make the strongest case for physical gold ownership.
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 Fingers pointed at the Federal Reserve
The Fed is singled out by critics
as largely responsible for failing to eradicate the root causes
of possible recession
Gary Duncan, Davos - Times Online - January 23, 2008
"Stephen Roach, a star
economist from Morgan Stanley, accused the Fed of again caving
in to Wall Street and market pressure with this week's emergency
US interest rate cut, and risking sowing the seeds of a future
with the potential creation of a new financial bubble.
"We've got prima facie
evidence that we have a central bank that is being goaded into
action just by what the markets are doing," he said. "It's
time to put an end to this, what I think is a very reckless way
of running American monetary policy. I'm quite astonished that
they did what they did yesterday."
USAGOLD Comment: This article cuts to the heart of what
many consider to be blunders by both the Federal Reserve and
the International Monetary Fund over the past few years. It is
an excellent commentary on the current economic climate, offering
the opinions of well known economists like Lord Levene, chairman
of Lloyds of London, George Soros, Larry Summers, former Secretary
of the Treasury under Clinton, and Stephen Roach, quoted above.
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 Emergency rate cut revives talk of "Bernanke
put"
Alister Bull - Reuters - Jan 27, 2008
"'They are getting themselves
deeper into a hole,' warned Robert Eisenbeis, former research
boss at the Federal Reserve Bank of Atlanta, who argued that
the cumulative 1-3/4 points of Fed easing since August posed
a clear moral hazard."
"'It makes people believe
that there will never be a downside. That housing will never
go down,' he said."
USAGOLD Comment: This is a good article, discussing
the re-emergence of the "Bernanke Put." Many fear that
Bernanke plays to the whims of the market, rather than enacting
monetary policy that is in the best long-term interest of the
economy as a whole. His shortsighted, reactive policy could leave
us in a much worse place than we began. This is a must read.
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ECB secretly rescues Spanish banking system
Ambrose Evans Pritchard - The Daily Telegraph - Jan 29, 2008
"The key difference is
that the ECB rescue operation in Spain has been disguised. A
veiled method is necessary since the eurozone lacks a clear-cut
lender of last resort. The IMF has warned that this gap in the
architecture of the single currency could prove serious in a
crisis."
USAGOLD Comment: Even though this article comes from
across the pond and deals with another European bank bailout,
it is still a very relevant read. With enough stress on the system,
there will be no lender to bail European banks out. Counter-party
failure could cause a domino affect crippling financial institutions
at home and abroad. For banks, this "gap" is a serious
concern. For investors like you, this "gap" is filled
by gold.
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 Gold Future Rise to Record as Dollar Declines;
Platinum Surges
Pham-Duy Nguyen and Halia Pavliva - Bloomberg - Jan 28, 2008
"'Gold investors are savoring
the recent emergency Fed rate cut as it invokes all three 'Horsemen':
global derivatives crisis on multiple levels, clumsy central
bank intervention, and deliberate currency devaluations,' John
Hill, a Citigroup Inc. analyst, said in a report yesterday."
USAGOLD Comment: While this article does discuss $1000
gold, getting to cite the quote above was worth putting the article
in today's newsgroup. This is truly the perfect storm. And while
the perfect storm could push gold to astronomical highs, the
price the yellow metal achieves is far less important than the
protection secured though owning it.
January 16th: Goldman revises
gold projection, joins Citigroup with $1000 price target
 Price of gold breaks through $900 level
Javier Blas - The Financial Times
- January 15, 2008
"John Hill, an analyst
at Citigroup in New York, said gold prices were likely to test
the $1,000-an-ounce level in 2008. Key gold traders such as UBS,
Mitsui Precious Metals, Barclays Capital and The Bank of Nova
Scotia expressed a similar view. 'Prices could explode to multiples
of these levels in the event of a full-blown US recession,' he
added."
USAGOLD Comment: Javier Blas has been our go to guy
over the past few weeks for bullish articles on the yellow metal.
We made available a video interview with Blas late last week
that was really interesting. If you haven't yet seen it, it can
be accessed at: http://www.usagold.com/dailyquotes.html in our
"Financial Times" section. The article makes yet another
strong case for four digit gold, highlighting a number of external
factors currently driving the gold market. We could see quite
a few fireworks this year, so get ready!
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Gold may his $1000 in third quarter, Goldman
says
Emma Thelwell - Telegraph.co.uk
- January 16, 2008
Analyst Oscar Cabrera, said:
"Further credit events and increases in oil prices can create
a 'spike' past the $1,000 level in the near term."
"Goldman, which expects
gold to average $1,100 during the course of 2010, expects demand
to be bolstered by demand from US and Asian investors, and from
the central banks of emerging markets seeking to diversify their
reserves."
USAGOLD Comment: This news has to make some of you chuckle.
It was only six weeks ago that Goldman called shorting gold in
2008 one of its 10 best investments for the coming year. That
was at $800. I guess losing your clients truckloads of money
in just a few weeks forces you to change your tune a bit. With
so many bullish predictions, buying the dips looks to be a prudent
strategy. As the risk for a recession mounts through this year,
liquidity injections will threaten to destabilize the currency,
and the markets, in ways many of us have never experienced. Those
who hold physical gold have a leg up on other investors. Not
only have they safely secured protection of their wealth, they've
also secured that elusive sense of calm amidst growing concern.
They rest easier knowing that no matter how fierce the storm
gets, they have the shelter they need.
January 8th: Gold at record
highs!
I could baisically throw a
dart and hit a bullish gold article today, and I'm not very good
at darts. There are a few articles though that really stood out
as great reads for today's newsgroup. Gold at record highs!!
Enjoy.
Flight to gold as investors lose faith in money
Telegraph.co.uk - Ambrose Evans Pritchard - January 7, 2008
"If you strip out the
Hunt anomaly, it is fair to say that gold established a "safe-haven"
level of $600 -- or $1,500 in today's money -- that roughly lasted
through the final phase of the Carter malaise, the oil shock,
and the collapse of confidence in the monetary order."
USAGOLD Comment: Ambrose Evans Pritchard compiles absolutely
phenomenal articles on gold time and time again. This is no exception,
offering an intriguing comparison of today's gold environment
to the last gold bull of the 1970's. He, like many others, makes
a strong case that gold in this range is still undervalued and
a great buy.
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Gold is the new global currency
The Financial Times - January 7, 2008
"A better way to think
of gold may be as central bankers used to before America dropped
the gold standard: not as a commodity, but as another currency.
As long as the dollar stays weak, gold's bull run will last."
USAGOLD Comment: This is a great article discussing
the re-emergence of gold as a global currency. Gold was thought
to be dead just six years ago and now, gold's allure is returning
with such strength its changing even the most skeptical financial
minds. This article goes on to say, "Prices have a long
way to go before they approach the inflation-adjusted record
touched in 1980 when Soviet tanks invaded Afghanistan. At Monday's
$859, gold was trading at less than half that level. It could
top $1,000 and still be at the lower end of what some analysts
argue is a safe haven range."
P.S. For this article and the
next you may have to register with Financial Times online to
access it. You can do so with a free trial.
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Bullish on Bullion
Javier Blas - Financial Times
- January 3, 2008 "This time, the price surge has been slow
and fairly constant since a low in 1999 of about $250 an ounce
and support has come not only from gold's status as safe haven.
Fundamental factors identified by analysts include strong jewellery
buying by the rising middle class in emerging countries such
as India; investors' long-term interest in gold as a hedge against
persistent dollar weakness; and falling output in South Africa,
the world's largest gold producer."
USAGOLD Comment: Gotta love that the Financial Times
is giving so much bullish play to gold. This is another good
article on the heels of the one above, offering a strong synopsis
of gold's current and likely continued performace. As so many
have before, this author writes in his concluding paragraph,
"Still, the latest surge looks much less impressive if adjusted
for inflation. In real terms, bullion would need to be well above
$2,000 to match the price achieved in 1980." With a $2000
handle within reach by most analysts' estimations, buying gold
below $1000 looks to be a great bargain.
RATING SYSTEM:
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