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Coronavirus-bear-market-2020-analysis

Gold Lifted Followng Bradford & Bingley Banking Sector Shockwaves

Commodities / Gold & Silver Jun 03, 2008 - 08:37 AM GMT

By: Mark_OByrne

Commodities Gold  closed at $893.50  in New York yesterday and was up $6.50 and silver  closed at $16.87  and was up 4 cents .

Gold's rise yesterday came despite little or no movement in the dollar and oil price and seems to have been primarily safe haven buying on continuing concerns about the credit crisis.


Gold Rises on Deteriorating Financial Conditions and Safe Haven Demand
In the UK, Bradford & Bingley sent shockwaves through the banking sector yesterday when it took the extraordinary step of renegotiating its £300m rights issue amid concerns it would face a “fight with the underwriters” if it tried to force the offering through on its original terms. The UK's biggest buy-to-let mortgage lender announced a profits warning saying it would make losses of £8m in the first four months because of rising arrears in its mortgage book.

On Wall Street, three of Wall Street's biggest banks were hit with ratings downgrades as S&P downgraded financials. Shares of Lehman Brothers, Merrill Lynch and Morgan Stanley — marquee names in the investment banking world — sank after a major ratings agency, Standard & Poor's, said it had lost some confidence in the banks' ability to meet financial obligations. Lehman shares fell 8.1%, Merrill dropped 3% and Morgan Stanley declined 2.6%. The B&B development was to be expected and it amazing how analysts can feign surprise as to its deteriorating financial condition. Once again, senior executives, management team and board of directors failed to keep shareholders up to speed with the bank's deteriorating trading and much of the media failed to ask  any hard questions.

If makes one wonder why anyone in their right mind would trust financial exec u tives on Wall Street and in the City of London when the continue to make so o thing sounds to investors that the worst of the credit crisis is over. Thereby lulling us all into a massive false sense of security and making the event u al denouement even more painful than if we have dealt in financial and economi c reality  continuously .

As the markets again realise that we are only in the early stages of the worst financial and economic crisis to face western economies since the 1930's, safe haven demand will again become an important factor driving gold prices much higher in the coming months.

Gold down 4% Last Week but Importantly was Up for May and is Still in a Bull Market
Gold had a difficult week  last week and was down nearly 4% after profit taking and technical selling on oil weakness and dollar strength led to a sharp fall in price. It is important to note that gold remained up more than 2.5% for the month of May thereby again outperforming the majority of stock markets. After the falls in March and April, the monthly higher close for gold in May bodes well for gold in the coming weeks and may indicate that the worst of this correction has past.

We are confident that this will be seen as another short term sell off in the enfolding bull market. Bull markets rise on what is termed a 'wall of worry' and this has especially been the case with gold. Gold is a market not understood by the majority of today's market participants due to a lack of knowledge of market. financial and economic history. Less informed participants called a top in the gold price when it reached $500, $700, $850 and over $1,000. All such predictions were extremely premature. Unfortunately many observers and vested interests fail to understand the real and powerful fundamentals driving this gold market.

The primary trends in oil and the dollar remain up and down respectively which should result in gold being well supported above $850 per ounce. While oil may continue to sell off, few expect it to fall much below $100, levels considered extremely high only a few short weeks ago.

Despite a positive May, m ore consolidation in the gold market  may be  necessary and a weekly close above $900 will be needed prior to the primary trend reasserting itself. 


Silver Chart  2003-2008


Oil Retreats, Gasoline Surges
While oil prices  fell sharply last  week, it is important to remember that gasoline prices have continued to surge.

Gasoline prices continued to hit new heights across the  U.S. last week and inflation pressures are beginning to hamper an already embattled U.S. consumer . State-wide, the average price of a gallon of gas rose 11 cents over the week to $3.84 a gallon, while the nationwide average rose 12 cents to $3.95 a gallon.

Retail gas prices hit record highs for the 20th day in a row, motorist group AAA's Web site showed Tuesday. The nationwide average for a gallon of regular unleaded rose to $3.937, up slightly from $3.936 the previous day. The climb in gas prices, which have steadily risen over the past  four weeks . G as prices are up  more than 10 % from a month ago and nearly 23% higher from year-ago levels. The average price for gas has passed the $4 a gallon mark in 11 states .

Inflation and stagflation are now stalking developed western economies and developing and emerging markets alike and this bodes well for gold in the long term as it was in the 1970's.

Today's Data and Influences
Today, the market  may seek direction from a speech by Fed Chairman  Bernanke for monetary policy clues to substantiate its interest rate view with the dollar vulnerable to any dovish comments or weak economic data (factory orders and auto sales due today as well as Friday's employment report).

Silver
Silver is trading at $1 6.80 /1 6.8 5 per ounce at 1200 GMT.

PGMs

Platinum is trading at $20 1 5/20 25 per ounce (1200 GMT).
Palladium is trading at $435/440 per ounce (1200 GMT).

By Mark O'Byrne, Executive Director

Gold Investments
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Gold Investments
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Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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