|Feb 03, 2007 5:14 pm
||PRECIOUS METALS REVIEW - 02/02/07
|| PRECIOUS METALS REVIEW - 02/02/07
In the precious metals markets this week . . .
Monex spot gold prices opened the week at $642 . . . traded as high as $660 on Thursday and as low as $641 on Monday . . . and the Monex AM settlement price on Friday was $646, up $2 for the week. Gold support is now anticipated at $644, then $628, and then $615 . . . and resistance anticipated at $655, then $670, and then $691.
Monex spot silver prices opened the week at $13.25. . . traded as high as $13.75 on Thursday and as low as $13.17 on Monday . . . and the Monex AM settlement price on Friday was $13.32, up $.01 for the week. Silver support is now anticipated at $13.20, then $13.04, and then $12.85 . . . and resistance anticipated at $13.55, then $13.80, and then $14.20.
Monex spot platinum prices opened the week at $1,167 . . . traded as high as $1,191 on Thursday and as low as $1,160 on Friday . . . and the Monex AM settlement price on Friday was $1,162, down $14 for the week. Platinum support is now anticipated at $1,155, then $1,145, and then $1,110 . . . and resistance anticipated at $1,186, then $1,205, and then $1,238.
Monex spot palladium prices opened the week at $345 . . . traded as high as $346 on Monday and Thursday and as low as $333 on Wednesday . . . and the Monex AM settlement price on Friday was $336, down $14 for the week. Palladium support is now anticipated at $328, then $318, and then $305 . . . and resistance anticipated at $344.50, then $354.45 and then $365.05.
QUOTE OF THE WEEK:
From David Morgan, economist, metals analyst and publisher of "The Morgan Report" newsletter (www.silver-investor.com) in his February 2007 issue released this week:
"According to Bloomberg, China is seeking to boost returns on its $1 trillion of reserves. Premier Wen Jiabao said China is building an emergency supply of crude oil and is plans to expand purchases into metals to shield the world's fastest-growing, major economy from supply disruptions. China's gold consumption is reported to rise by 17% this year to 350 tons. Consider how rapidly China is growing: in 1980, very few in China owned telephones; by 2005, more than 350 million cell phones were in use by China; and by 2020, China will be the largest automobile market on the planet estimated to have 130 million cars on the road.
Ambrose Evans-Pritchard recently reported that the vast imbalances in the global system were growing worse by the day and might be setting the stage for a financial crisis, experts warned. Zhu Min, the Bank of China's executive vice president, said the explosive growth in derivitives to $370 trillion had flooded the global system and made it too easy to acquire credit.
Predicting that the storm would break next year, he said, 'There is money everywhere. You can get liquidity from the market every second for anything. Derivitives are eight times global GDP and much of the money is flowing to Asia, where people have no idea what risks they are taking.'
Mr. Zhu said the money supply in the U.S. had doubled from 25% to 50% of GDP in 20 years and had risen to 75% of GDP in Japan. The effect of so much easy credit had been to reduce yields on risky bonds to wafer-thin margins and blind investors to risk.
'The global imbalances are becoming more concentrated, not less,' he said. While China is adding to its colossal reserves at a rate of $200 billion a year, five countries, led by the U.S. and Britain, now account for 84% of the one trillion of trade deficits in the global system.
These same concerns were echoed by Nouriel Roubini, economics professor at New York University. 'The amount of leverage in the system is growing at rates that are scary. We don't know if derivitives are diffusing the risk or concentrating it, but the risk of something systemic happening is rising,' he said."
. . . And this from Richard Bernstein, Chief Investment Strategist at Merrill Lynch in New York, in his February 1st U.S. Strategy Update:
"We have repeatedly argued over the past several years that attempting to fix the US's structural economic problems via the currency rather than via responsible fiscal and monetary policy, is probably the most politically palatable route, and might give the appearance of wealth (i.e., stock prices go up, but the currency goes down). However, the bottom line is that citizens' standards of living fall when their currency falls."
"Zealous gold bugs often argue that today's currency has no true value, and this article is right up their alley. Both fiscal and monetary authorities in Washington should take note.
We are not gold bugs per se, but we continue to believe that a small proportion of a portfolio should be in gold and/or gold shares."
This is not a recommendation to buy or sell.
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