Monday, August 20, 2007

T-minus Any Day Now

At this hour my PC is strung together with spit and duct tape. My home's AC has tanked. And I am hot and bothered. I will dash this off quickly and hope it finds it's way to you.

Global demand for gold hits record US$14.5bn

Global demand for gold jewellery has reached a record US$14.5bn, 37% higher than the second quarter of 2006 with particular strength across the key global gold markets, according to figures released by the World Gold Council (WGC).

On the other hand, net retail investment increased by 51% in tonnage terms to 132.9 tonnes and 60% in dollar terms reaching US$2.9bn, compared to Q2 2006.

Where industrial demand is concerned, the second quarter of 2006 saw a slight increase of 2% in tonnage terms to 116.5 tonnes; and 9% up in dollar terms to 2.5bn, a new quarterly record.

In the Middle East and GCC region, demand saw a 20% increase to 97.5 tonnes higher than the depressed levels of the same quarter in 2006 (jewellery demand increased by 21%, net retail investment increased 9%).

Global Gold demand rising, coupled with today's incendiary inflation potential, Gold may soon be the ONLY "safe" investment on the planet soon.

The Panic of 2007
By: John Mauldin, Millenium Wave Advisors

John Mauldin's most recent essay is a must read to find an understanding of today's global credit crunch.

"More important than the symbolic 50 basis point cut in the discount rate was the move in today's FOMC statement from the semi-neutral bias of the last few months ('semi' as inflation was still their predominant concern until recently) to a clear easing bias today. Essentially today the Fed telegraphed a certain Fed Funds rate cut at the September meeting and possibly more cuts in the months ahead.

"The statement was very clear in signaling an easing bias and a policy cut ahead: 'Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth forward. The statement also pointed that 'the downside risks to growth have increased appreciably.' And it clearly signaled that the FOMC is 'prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.'

"The stress on the downside risks to growth and the failure of the statement to even mention the 'I' word (Inflation) suggests that, in about a week since the previous FOMC meeting, concerns about inflations as the predominant risk have faded and concerns about growth have sharply increased. For a Fed that until recently was in the soft landing camp (slowdown of growth but still moderate pace of growth) today's statement is a signal that they are starting to worry about a hard landing of the economy.

"For the first time in over a year the Fed is now implicitly admitting that they underestimated the downside growth risk: until now the official Fed view was that the housing recession was contained and bottoming out and not spilling over to other sectors of the economy; and that the sub-prime problems were also a niche and contained problem. The sudden shift to a strong easing bias suggests that the Fed miscalculated until now the damage to the economy and to financial markets of the housing recession and its real and financial spillovers."
--Nouriel Roubini

Fundamentally, economically, and seasonally Gold is "t-minus any day now" for an explosion thru the $700 barrier and an assault of 4-figures. The flight will be bumpy, but a a flight it will be...a flight to safety that is.

658 remains the key to Gold at this hour. The bulls must recapture and hold 658. We're going nowhere until they do.

Silver has a long ladder to climb. The first rung is at 12.90. Followed by 12.07, 12.28 and 12.57. 12.57 could prove to be a bloodbath for the shorts in Silver. 12.57 is the support that gave way and led to the demise of many Silver Bulls last week. I look forward to payin dem Rat f***king Bastids back shortly.

Chins up folks. Nothing worth having or achieving should be easy. We'll appreciate it more, if we rise above the pain. And at this hour we are the Phoenix.

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