Tuesday March 04, 2008

Gold and oil soar as inflation fears grow

theaustralian.news.com.au :

Oil edged past a 28-year-old record and gold approached a new landmark early yesterday [3 Mar 2008] in New York, as investor fears about inflation combined with energy-supply fears to spur a continuing flight into hard assets. Crude-oil futures on the New York Mercantile Exchange touched $US103.95 in intraday trading before closing at $US102.45. Oil has now surpassed its longstanding April 1980 record, when adjusted for inflation to January 2008 US dollars, of $US103.76 a barrel.

Gold inched closer to the psychologically important threshold of $US1000 an ounce, hitting an intraday high of $US986.90 before settling at a record $US981.50 on the Comex division of Nymex. The most active gold contract for April delivery hit $US992 during the day.

Philip Verleger, an independent energy economist, said the dramatic surge of oil and gold inthe past few days was a reaction to testimony by Federal Reserve chairman Ben Bernanke to Congress. Mr Verleger said Dr Bernanke signalled that the Fed's economists were "not so much worried about inflation as they are worried about the state of economy. That's a clear sign to everybody they are going to cut interest rates again and inject more liquidity into the financial system. And it's a clear sign to the financial community that inflation rates are likely to rise. The natural response of investors to such a signal is to increase their purchases of hard assets."

- So I was talking about a consolidation of crude oil between $95-105 earlier. $100 has established itself as a floor as NYMEX crude oil bounced off and started to consolidate around $102. I'm looking at a breakout above $105 that will set the stage for $120 and after that $150, and eventually $200 and beyond.

As for gold, $1000 gold is like a magnet, a black hole sucking buyers and sellers alike into the singularity that is beyond the $1000 level, a resistance level that will eventually become support and mark the beginning of global hyperinflation - in the US, in Europe, in China, India, Singapore, Malaysia, and even Japan, the former bastion of deflation. Dollars burn in all currencies everywhere.

See also :

1. Crude oil reaches $103.05 record high on dollar drop, UK gas terminal fire
2. US dollar sinks to new lows, gold price hits $955.70 all-time record, crude oil hits $101.43 record high
3. Hyper-inflation : early warning signs

(2008-03-04 23:43:13 SGT) [Biz] Permalink

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