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Consumer Price Inflation has
finally arrived and Gold will have its day in the sun yet.
Not a day goes by without another financial institution getting bailed out.
Let’s see, we have Countrywide Financial, German IKB and now the UK based
Northern Rock.
And the rumours. Oh the rumours.
Let’s see, there has been rumours
of liquidity problems at Barclays Bank, Alliance & Leicester and
Australian Adelaide Bank and on and on…
Central Bankers the world over have predictably come to the aid of ailing
financial institutions by providing loan guarantees and emergency funds and
rate cuts in an attempt to keep credit markets operational
The message ofcourse has not been lost on Gold.
When central bankers open their check books for all to come and borrow, to
borrow with abandon, the message the market receives is clear. Nobody will be
left to fail and central banks will print as much money as it takes to ensure
this. Predictably, Gold will continue
to rise as the bailouts stack up.
Loose monetary policy is going to unleash devastating inflation and will
further underpin the bull market in Gold.
Chart 1 - 10-yr Note Yield bouncing off 50 month moving average
Bonds are challenging their 50 month moving average and long-term uptrend.
Probabilities favour higher yields going forward.
Talking about inflation, what better way to gauge
Consumer Price inflation than by looking at food prices? Just take a look at
this chart of Corn going back to 1972!
Chart 2 - 35 year Corn - 400c is tough resistance
400 – 420c has been incredibly strong resistance going back as far as
1973!
With the continued strength in Current Oil Prices
it seems likely that Corn will finally breakout of this consolidation and unleash
a fire storm of price inflation.
This will cause long-term rates
sharply higher along with Gold as the safe haven investment of choice!
More commentary and stock picks follow for
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Greg Silberman
CA(SA), CFA
greg@goldandoilstocks.com
I am an investor
and newsletter writer specializing in Junior Mining and Energy Stocks. Please
visit my website for more free articles and analysis
Click here: http://blog.goldandoilstocks.com
This article is
intended solely for information purposes. The opinions are those of the author only. Please conduct further research and
consult your financial advisor before making any investment/trading decision.
No responsibility can be accepted for losses that may result as a consequence
of trading on the basis of this analysis.
_______________________________________________________________________
This
article is intended solely for information purposes. The opinions are those
of the author only. Please conduct
further research and consult your financial advisor before making any
investment/trading decision. No responsibility can be accepted for losses
that may result as a consequence of trading on the basis of this analysis.
Information contained
herein is obtained from sources believed to be reliable, but its accuracy
cannot be guaranteed. It is not intended to constitute individual investment
advice and is not designed to meet your personal financial situation. The
opinions expressed herein are those of the author
and are subject to change without notice. The information herein may become
outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an
interest, family and associates may from time to time have positions in the
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