Commodities Roundup: Gold bugs party alone

September 26, 2008

gold3.jpgCrude oil futures sheds close to 4% on the NYMEX. Copper, corn and wheat end lower. But not gold.

Dec gold settles up $6.50 at $8885.0 an ounce.

The ‘gold bugs’ are feeling vindicated by the markets in the past weeks. Gold Anti-Trust Action Committee’s Bill Murphy predicted this week that the Treasury-led bailout plan give a “staggering” boost to gold because it would feed inflation and hurt confidence in U.S. markets, Frank Tang reports.

Gold’s rise above $1,000 an ounce in March was an “I told you so” moment for GATA, Tang writes, noting that that conventional investors view GATA as a conspiracy-theory group, with very little evidence to back up its claim that governments, central banks and commercial banks have colluded to keep the price of gold weak.

(Pictured: Lam Sai Wing, chairman of Hang Fung Gold Technology Group, poses in a washroom decorated with gold and jewellery in his jewellery shop in Hong Kong in this April 24, 2006 file photo. Lam died after a sudden sickness in his home on September 25, 2008 at the age of 53, his company announced on late September 26, 2008. REUTERS/Paul Yeung/Files)


May Mr. Lam Sai Wing rest in peace. Though I wish I knew what he based is predictions in the gold surge, I’m sure his guess was just as good as ours. I believe the reason that gold is not as high as expected by Mr. Murphy has to do with the current confusion and delay in the official passing of the bailout bill. However, I do agree with the Gold Anti-Trust Action Committee that inflation will ensue. As with the influx of over a trillion dollars. What don’t believe me?
Troubled Asset Relief Program: $700 billion
Fannie Mae and Freddie Mac: $200 billion (est.)
AIG: $85 billion
Bear Stearns: $29 billion
Current running total: $1,014 billion
This is essentially what is needed to create inflation. I know one group that’s in favour of that, and that would be the FX traders who are consistently shorting our dollar, because it’s just too easy to resist. Let’s keep in mind that our current trading deficit is nearing the $7TRILLION dollar mark (it’s actually $6.9T), Sourcethat’s an increase in our deficit of approximately 15%. My question is how much more deeper in debt can our government handle. I’d also like us to remember that if we can’t get out, there is an increasing possibility of the d word. That’s right default. Have a great weekend everyone!


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