Stock Preacher

Gold futures dipped on Wednesday as weaker equities prompted funds to consolidate recent profits, but the market drew support from a renewed appetite for risk among investors. Platinum and palladium, boosted this week by strong July car sales, rose on supply worries because of a possible strike at the power utility in top platinum producer South Africa. Renewed interest from investment funds buoyed commodities and equities alike, as investors focused on economic recovery rather than deflation which had decreased inflation-hedge buying in Gold earlier this year. US December gold futures settled down US$3.40 at US$966.30 oz on the COMEX division of the New York Mercantile Exchange. Spot Gold dipped to US$966.20 an ounce at 3:30 p.m. EDT from US$966.75 oz late in New York on Tuesday.

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Gold futures on the COMEX Division of the New York Mercantile Exchange ended higher for the fourth session on Friday, buoyed by the record low interest rate and a weak dollar. Silver and platinum went up, too. Gold price for August delivery gain US$1.50 (0.2%) closing at US$ 941oz. It is the first time for the yellow metal stands above US$940 in almost three weeks despite profit-taking ahead of weekend pared the gains after the contract touched its intraday high of US$949. Savvy market observers say that Gold’s appeal of hedging inflation continued being fueled after the Fed Reserve decided on Wednesday to keep the benchmark interest rate at a record low level between zero and 0.25% “for an extended period.” In response to a report released by People’s Bank of China, the US$ went down and provided some bullish support to the precious metal earlier in the session. The Chinese central bank reiterated that it will push the reform of the international currency system to make it more diversified and lessen US$’s role as the world’s reserve currency. September Silver finished at US$14.156 oz, up 12.4 cents. October Platinum rose US$13.70 to US$1,210.70 oz.

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Crude Oil prices rose more than US$2bbl last Friday, to hit a four week high on support from improved US Consumer confidence and evidence of record levels of compliance by OPEC with its agreed output cuts. US Crude Oil futures jumped US$2.08 to settle at US$53.20bbl, after hitting US$53.65, the highest since April 3. Brent Crude settled up US$2.05 at US$52.85.The gains came after a survey showed consumers in the USA, the world’s top energy user, felt more confident about the economy in April than at any time since September 2008. “This should push this market higher,” said Nauman Barakat, senior vice president at Macquarie Futures USA. Equity markets also gained, continuing a strong trend in recent weeks of commodity markets riding in tandem with Wall Street and other global shares.

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Sharks do not get cancer, so scientists who are interested in understanding the dynamics of cancer say the study of sharks may be rewarding. Similarly, looking at stocks doing well in a sour market can sometimes yield insights. One might get a clue to the market’s future leaders or discover individual stocks worth buying. Of 1,665 US stocks with a market value of US $500M or more, 117 have gained 20% or more this year.

The best gainer through Feb. 11, excluding stocks with tiny trading volumes, was Advanced Medical Optics Inc., up 231% on a takeover offer from Abbott Labs. It’s no coincidence that there a good gainers are in the health-care field since health care is traditionally a defensive sector during recessions and bear markets, and it is playing that role once again.

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Global Gold and Silver trading posted record activity since the start of the credit crisis, according to the Bullion Markets 2009 report published in London last week by the International Financial Services London (IFSL). Gold turnover increased 58% in 2008 to a record US$ 20.2 T. Silver trading increased 39% during the year to a record US$2.6T. The traditional “safe-haven” appeal of the precious metals has attracted many investors to this asset and the growth in turnover was partly due to an increase in prices of precious metals during the year with Gold posting an all time high in March of US$1,011 oz. According to the report, the OTC market accounted for nearly 75% of Gold trading and 56% of silver trading. Most of this activity was transacted through the LBMA (London Bullion Market Association).

Daily reported net trading in Gold on the LBMA averaged US$20B in the first 11 months of 2008, up 45%t on the same period of 2007. Daily trading in silver on the LBMA increased 32% to US$2B. Futures and options trading of Gold on exchanges increased more than 80% in 2008 to a record US$5.1T, according to the report. Trading of silver increased 60% to a record US$1.2T. Exchange traded Gold and silver funds have been the strongest source of growth in demand since their introduction in 2003. Comex in New York, MCX in India and Tocom in Tokyo account for most of the exchange traded activity.

Investors who know their history are moving into Gold. They know that in the last few years of the 1970s, the Gold mining sector featured quadruple digit share price gains as Gold shot North. With the same economic conditions prevailing now, it’s not unlikely to see the same happening once again.

Bottom line: US$800 oz Gold may turn into $1,300 oz Gold in the foreseeable future. Scarce, precious metals like Gold have become sought after investments following the huge sell off in equities. Many Gold Bugs and value analysts are predicting a major Bull Charge North in Gold, and that is has already begun.

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The World is Watching and Wants to know, Who is America Now?  Stock index futures were little changed Tuesday night after Democrat Barack Obama won the U.S. presidency. The uncertainty over who will guide the world’s largest economy is now over. A rise in stock index futures suggest on Wednesday Wall Street may build on yesterday’s rally, the biggest ever for an Election Day in the USA. May believe that the Barack Obama’s win is factored in.

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