Wednesday, January 21, 2009

Gold Moves Higher With The Dollar

The first full day of the new regime... I will say this, it makes one proud to be an American when you can watch a peaceful handing over of leadership.

Yesterday, the Bank of Canada (BOC) lowered their official interest rate by 100 BPS or 1%... I told you long ago that the BOC would follow in the Fed's footsteps, and they have... Canada had it all going for them last year, with gold rising, Commodities like Oil, natural gas, and metals all rising, but that curtain came down hard on Canada and their dollar / loonie. It will be some time before the loonie can recover... but... if my scenario of soaring inflation for the U.S. and rising Commodities again comes to fruition, then it won't be that long.

Morgan Stanley issued a report on Gold recently that called for Gold to reach a new record within the next 3 years. They call for the Gold to "average" higher each of the next three years through 2012, with the average this year to be $900, next year $1,000, the following year $1,050, and $1,075 in 2012... Personally, I believe their call to be quite conservative, something that we're going to see a lot of in the next few years, as these research teams, back off the "hyper-calls" for assets, as they walk gently over eggshells.

So how do you take advantage of this prediction (if you believe it to be true)? Try GLD the ETF, or you could look at a junior gold miner: Royal Gold -RGLD (in anuptrend since Mid Oct '08) or the grandaddy of them all Freeport McMoran-FCX( lloks like it is finding support at around $22).

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