BOCA RATON, Fla., Jan. 4 /PRNewswire/ -- Yesterday gold rose 3.3% in
London to $861.10 a troy ounce, surpassing the previous high of $850
reached in January 1980, a result that was predicted by James DiGeorgia,
editor and publisher of the Gold and Energy Advisor newsletter
(http://www.goldandenergyadvisor.com).
"If you're a stickler, I missed my target predicted price for 2007 by
two days," says DiGeorgia.
Traders reported consistent selling pressure on gold throughout
December, but DiGeorgia says, "This indicated investors were booking
profits before the year-end and not turning negative on gold. Today's surge
in the price of gold would seem to prove my analysis correct."
Analysts are saying the surge in gold is as a result of both a weaker
U.S. dollar and the poor influential ISM manufacturing survey numbers
released yesterday that indicated industrial activity contracted in
December. This weakness is fuelling fears that the U.S. economy could be
dragged into recession.
"I think that assertion may well be accurate, but it ignores the bigger
picture problem," continued DiGeorgia. "Gold is climbing because our
government's spending is literally out of control. We are well on the way
to exceeding the extra $1.5 trillion our government had thought the wars in
Iraq and Afghanistan would cost. Throw on the fear of a banking meltdown -
thanks to the sub-prime mess - and the Federal Reserve and the world's
central banks are doing everything to avoid a 1929 style economic meltdown
by pumping hundreds of billion dollars into the world's banking system."
In 1929, when U.S. banks suffered a massive-run by their customers, the
Federal Reserve reacted by constricting money supply. The world's central
bankers were deathly afraid of triggering the same type of hyperinflation
that devastated Germany earlier in the 1920s. Thus, the Federal Reserve
didn't add liquidity and instead choked off credit, triggering the worst
depression in U.S. History.
Economists have long recognized the Federal Reserve's mistake, and the
steps taken now to avert a similar economic disaster lead to bolstering the
world's lending institutions with liquidity.
According to DiGeorgia, that strategy should be complimented with
healthy tax cuts and reduced government spending, but that neither is
expected during this election year. This may change as the threat of a
recession becomes more compelling and as Election Day 2008 approaches.
"If nothing changes and the current economic course of direction is
uninterrupted we're very likely to see a period of stagflation. In such a
scenario we'll see $2,500 gold, $5,000 platinum, and even $150 oil as a
consequence. We may also see stocks bounce back and even break Dow 15,000,
17,000 - even Dow 20,000. But keep in mind that the zeros added will be
fueled by a weaker and weaker U.S. dollar," concludes DiGeorgia.
About Gold and Energy Advisor
The Gold and Energy Advisor is a monthly newsletter that covers the
precious metals, and energy markets with the single goal of delivering
money making recommendations to its subscribers. Gold and Energy Advisor is
edited by James DiGeorgia, who has extensive experience in precious metals
and the energy markets, and is considered one of the world's foremost
authorities in both, having been frequently quoted in The New York Times,
USA Today, Financial Times, Money magazine, The Chicago Tribune, and
Barron's. DiGeorgia is the author of the popular books The Global War for
Oil and New Bull Market in Gold. For more information, visit GEA online at
http://www.goldandenergyadvisor.com.
SOURCE Gold and Energy Advisor
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Related links:
http://www.goldandenergyadvisor.com
CONTACT:
Noah Davis, +1-561-391-8717,
ndavis@reevespr.com, for Gold and Energy Advisor
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