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Precious Metals Bloodbath as Gold Crashes through $800

Commodities / Gold & Silver Aug 15, 2008 - 05:57 AM GMT

By: Mark_OByrne

Commodities Both gold and silver gave back the previous day's gains yesterday on the COMEX. Gold finished trading in New York on Friday at $808.30, down $17.20 and silver was down 58 cents to $14.23. Gold continued to fall in Asian and early European trading and is trading at $782.80/783.40 per ounce (1100 GMT).


The bloodbath in the precious metals arena continued yesterday, overnight and this morning and the scale and speed of the selloff has surprised even the very bearish.

The dollar's continuing sharp rally to new record monthly highs against most major currencies (as high as 1.4696 against the Euro this morning ) has seen gold's brutal recent sell off continue. In conjunction with the dollar's continuing rally we have seen oil prices continue to fall (Light Sweet Crude Oil Future - SEP08 at 113.20 down 1.57%.)

Considering the extent of technical damage done in the last two weeks, it is time to be cautious about any possible support levels but $750 is the next level of technical support. While technical damage has been significant, physical demand is extremely strong at these levels. There is much anecdotal evidence of shortages in the physical bullion market with some US wholesalers out of stock of Kruggerands (1 ozt) to sell to the retail investment marketplace. Also industrial users of the metals see these low prices and a significant buying opportunity.

It is worth remembering that gold's price of 12 months ago was $650 and we are still up 20% since the start of the credit crisis ($650 to $784). A mean feat considering the extent of declines in other markets.

The fundamentals of gold remain very sound as the macroeconomic fundamentals continue to deteriorate. Financial data yesterday internationally was very poor, particularly the jobs and inflation numbers in the US. Geopolitical risk remains to the fore as well as the Russian- Georgian crisis looks set to deepen. In the short term the trend remains firmly down however the medium and long term fundamentals remain sound.

Today's Data and Influences
Various important US figures are released today including the TIC's report for June, as well as the Empire State (manufacturing index) and Michigan Consumer Sentiment surveys for August.

Gold and Silver
Gold is trading at $782.80/783.40 per ounce (1100 GMT).
Silver is trading at $13.86/13.90 per ounce (1100 GMT).

PGMs
Platinum is trading at $1384/1390 per ounce (1100GMT).
Palladium is trading at $286/290 per ounce (1100 GMT).

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold and Silver Investments Limited
No. 1 Cornhill
London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

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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