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A Good Day for Gold and Stock Markets

Commodities / Gold & Silver Nov 25, 2008 - 09:59 AM GMT

By: Mark_OByrne

Commodities Gold has given up some of yesterday’s and the last four days gains. Profit taking seems the most likely explanation as the dollar remain largely flat but the weakness in oil may be contributing to gold’s weakness. Continuing unprecedented volatility in markets is leading to further safe haven demand.


Golden gains

Gold touched $829 per troy ounce yesterday, its highest level since October 16th. This means that the yellow metal has gained nearly 13% in 3 consecutive days of trading. The stock market gains have stalled the surge somewhat and it is currently trading at $805 but the sentiment remains bullish and an upswing to $845 is certainly possible in the next week. Silver continues its rally out of a down trend and is currently at $10.16. However, if the metal does not break through the November high of $10.80, there may be a quick pull back.

Gold remains oversold and continues to offer real value - both fundamentally and intrinsically. Concerns about the long term health of the world’s reserve currency should see gold remain well supported above $780 (recent resistance) especially as we are likely to get confirmation of fastly slowing US economy in GDP numbers today.

The titanic struggle between massive deleveraging of speculative players and unleveraged buyers of physical bullion continues. The leveraged speculators won the first round with the unprecedented wholesale liquidation selling in futures markets but unleveraged physical buyers who are unencumbered by debt are showing themselves as very strong hands. As the strong supply and demand fundamentals reassert themselves physical buyers who shun the casino of the leveraged futures market and remain properly diversified will likely be handsomely rewarded in the coming months. Particularly if the increasing rumours of a default on the COMEX in the coming months come to pass.

A good day to play FTSE

The FTSE 100 index rose 9.8% yesterday, its biggest ever one day gain, buoyed by news that the US government had agreed to bail out troubled leviathan, Citigroup. Other stock markets followed suit, with the S&P 500 up 4.5% and the pan European Eurofirst 300 gaining 8.9%. Citigroup itself surged by a rather immodest 58% as financial stocks rebounded. As ever the sustainability of these gains is questionable.

By Mark O'Byrne, Executive Director

Gold Investments
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Dublin 2
Ireland
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Gold and Silver Investments Limited
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London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
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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.

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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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