Gold prices picked up a few additional dollars of value overnight as the crude oil market spiraled out of control reaching as high as $125.50 per barrel. The bullion price drew closer to $890 as this year's fairly lackluster Indian festival demand came to a close, but saw support from the apparently unending surge in oil. The Economic Times of India sums it up: The local market digested the outcome of the two-day Akshaya Tritiya festival that ended on Thursday, but the largely moderate sales showed Indians were not used to gold's current levels, traders said. Demand for gold is set to taper off in the weeks ahead and slip into a lull as the monsoon sets in next month and weddings become rare.
Demand for commodities as inflation hedges resurfaced this week, after oil's largest weekly gain in more than a year. Black gold has now doubled in value and poses serious threats to the global economy. Americans may well spend this driving season paying closer and closer to what their motoring counterparts in Europe and elsewhere are already paying. Or, not driving. Try $6 per gallon or more, for a start.
New York spot trading opened with a $2.50 gain at $885.50 bid, and a close of from $885 to $890 could set it up for its best weekly gain since February. The dollar continued to decline towards 73 on the index in early trade, as it grappled not only with the parabolic oil price track, but also with an amalgam of financial firm losses and woes ranging from Allianz to AIG to Citi. To cap things off, the greenback also weighed the ECB jawboning regarding rates not budging any time soon (as in lower) in order to fend inflation off. Silver gained 11 cents to $16.94 while platinum rose a very robust $67 to $2085 and palladium climbed $5 to $441 per ounce. Today will see only the release of the weekly leading index but the trade remains firmly fixated on crude oil's story.
Someone else who has been preoccupied with commodities for quite some time now, has chimed in on the ongoing saga in these markets: Jim Rogers. Yes, the one who picked up and moved from the USA to...Singapore because he likes China so much (except for the smog). Courtesy of the China Post, we now offer you Mr. Rogers' predictions and musing on an assorted list of items. Again, his opinions, but not all not necessarily ours:
- Gold is in a correction right now. I suspect it could go down to US$800, who knows, or US$750. I'm terrible at market timing, but if gold goes down some more, I plan to buy some more.
- I've started to think about buying base metals, Rogers said. I'm not buying base metals yet but I've noticed some of them are down a lot and if they continue to consolidate, I will probably be buying base metals.
- Oil in my view will certainly have to go above US$150 or even US$200 during a bull market. This is not a short-term view. We've not had a major oil field discovery anywhere in the world over 40 years.
- Agriculture is going to be one of the most exciting growth industries in the world for the next 10-15 years. Conservative agricultural banks such as Rabobank NV will have their sun now.
- Rice prices have to go much higher before supply rises. Rice at times in the dark recesses of history, adjusted for inflation, was much higher than now. Inventories are very low and nobody's becoming a rice farmer these days. Young Chinese haven't gone into rice farming in the last 30 years. They've headed to Shanghai and gone down to the new stock exchange or commodities exchange and that's true in most parts of the world.
- I expect a nice rally in the American dollar because so many have been bearish on the American dollar including me.
- America is also a huge producer of agriculture and if I'm right about agriculture prices, which I think will go up a lot, that's going to help America compared to those countries which don't have agriculture.
The session could still prove to be stormy as participants align their books ahead of the weekend. Remain nimble and watch the news tickers.