RSSMy Near-Term Prospects For Gold
By Jim Welsh | October 22, 2008 | 11:49 AM | 0 Comments
As forecasted last fall, the EU, Great Britain, and Japan posted a negative GDP report in the second quarter, and are weakening. Growth has also slowed in India and China. The global economy is slowing, and will be far weaker than the ‘decoupling' crowd expected, just six months ago! This means the demand for base metals (zinc, lead, copper, and platinum) will be weak. As fears about a complete credit collapse ease, the fear bid for Gold is going away. I think Gold prices will be pulled down, as base metal prices decline. Although the extraordinary measures adopted by central banks may be inflationary in the long run, in the short run they have not yet stopped home and equity prices from falling, nor prevented a further contraction in credit creation. All signs of deflation. Gold won't move up, until after a period of real stability, and we aren't there yet. This suggests Gold could drop to $660.
Last month I suggested adding a small position to the Gold stock ETF(AMEX: GDX) if it dropped below $35.00. I regret that I forgot to state a stop for this position ($31.60). I apologize for this error.
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