Daily Commentary

Banks Coordinate Interest Rate Cut

by Joe Battaglia
Posted: October 8, 2008

The Fed, the ECB, the Bank of England and several other central banks executed a coordinated interest rate cut today.  This was, as I forecast would occur, and it caused the precious metals to make a substantial move to the upside.  Shortly after the rate cut gold jumped $41 and silver $.59.  Stocks, including U.S. stock futures rallied nicely on the rate cut, however they quickly gave back the gains as the market tried to digest the outlook.  Once the U.S. market opened stocks began to rally nicely with the Dow gaining over 100 points and gold giving back about half of the gains.  In the first half-hour of trading, gold is up $27, silver is up $.34 and the Dow is up 100 points.  The dollar is trading at about unchanged at 80.96 and oil is down $2.19 at $87.86 a barrel.

 

Gold and silver continue to benefit from safe haven demand.  The market turmoil we have seen overnight, with foreign stock markets tanking again, obviously increases the demand for gold as a safe haven asset.  This coordinated interest rate cut should lead to gold surging further in the coming months.  As I have stated over the past few days, UBS bank, Citibank, Barclay's and others are all raising their forecasts for gold.  Citibank has steadfastly said gold is rising to the $1,000 level and beyond.  In fact, this week they said in their report that if the crisis continues and worsens, gold could go to many multiples of $1,000 an ounce.  That commentary is included in Goldline's free information package.  You can get the free information package simply by calling Goldline at 1-800-827-4653.  You will also find several other very helpful articles that may assist you in making sensible investing decisions. 

 

With gold now back above $900 an ounce, the prospect for it making a move into the $1,000 range over the next few months is increasing.  When one looks at the overall impact of flooding the world financial system with cash by pretty much all central banks, one has to come to the conclusion that ultimately this depreciates the value of all currencies against gold.  Competitive currency devaluations are always beneficial for the one true honest money, gold. 

 

There are many reasons to own gold but the most prominent and important is that is real money that provides purchasing power protection or wealth protection over the long term.  Most investors are accumulating gold as a wealth protection asset or another way of saying that is as a safe haven asset.  This morning gold closed in on a key resistance level at $932 an ounce.  If it gets above $932 it would be a significantly bullish development suggesting a challenge of psychological resistance at $1,000, according to technical analysts.  One analyst from Commerzbank, Eugene Weinberg, said bailouts and rate cuts can "only be seen as an indication of the financial market crisis reaching even greater depth".  He said further troubles in the financial markets will be supportive of gold.  James Moore, also a noted analyst said he expects gold to rise more in coming sessions.  Another positive indicator is that December gold has risen above its 200-day moving average. 

 

On a positive note, pending home sales for August rose 8.8%.  That is an indicator that prices have fallen to a level where people are interested in buying again.  It is also an indicator that the banks are selling repossed homes at whatever price they could get.  Turning back to the coordinated rate cut, the Fed has now lowered its rates to 1.5%.  When you consider paying interest on reserves amounts to a ¾% cut, rates are basically ¾% for the banks.  That means the Fed has just about run out of ammunition in dealing with this credit crisis.  Once again, this provides lots of reasons for investors to move to gold.  When you take interest rates and subtract them from the inflation rate, it is obvious people are losing money by holding interest bearing securities.  In that environment, gold often makes a strong move to the upside. 

 

Call Goldline today.  Ask them to assist you in getting started with gold and silver assets.  Be sure to ask about Goldline's Price Guarantee Program.  It is unique and no one else in the country offers this special program.  The program provides you with a two-week window of opportunity to re-price your order in the event of a correction.  It is a valuable tool that is desired by many investors.  Also ask how you can acquire free gold coins in conjunction with a purchase.  Call Goldline at 1-800-827-4653 for the details.  Also ask Goldline for the free information package.

 

Investors should contact Goldline and ask them to explain the features, benefits and cost structure of the various gold and silver investments that are available to you.  Select those that best meet your own personal and individual investing needs and objectives.  Investors looking for low transaction costs may wish to consider bullion assets such as American Eagles, Krugerrands, Canadian Maple Leafs, Silver Bags or Silver Bars.  However, the Price Guarantee Program is not available with these assets.

 

If you would like to take advantage of the Price Guarantee Program, which provides you with a two-week window of opportunity in which to re-price your order in the event of a correction, you must select assets with some collectible value such as Swiss 20 Francs, Double Eagles and Silver Dollars.  When you acquire $6,000 of private gold, you will receive a free gold coin.  Investors may wish to consider a tube of these coins to obtain two free coins.  Call Goldline at 1-800-827-4653 for further information.

 

To receive the free information package including the four articles on the dollar, the economy and gold call Goldline at 1-800-827-4653.  Goldline also provides several other helpful articles.  There are a number of other independent third party source articles that you will find extremely helpful and informative.  You will also receive the Client Account Agreement, a company brochure and a Coin Facts Risk Disclosure Booklet, read these carefully before you make an investment.  Call Goldline now to receive your free information package at 1-800-827-4653.

 

 

 

^{You should carefully read the client Account Agreement and the Risk Disclosure information. These explain important things you need to know before you invest in precious metals, such as: past performance does not guarantee future results. Transaction costs are generally 5% to 10% on bullion and 30% to 35% on coins. This is also referred to as the spread, or the difference between the buy price and the sell price. The market must go up enough to overcome this spread before an actual profit is achieved. All markets go up and down. Coins are a long-term, three- to five-year, preferably five- to ten-year investment, suitable for 5% to 10% of the average portfolio. Please see Goldline's Risk and Disclosure Statement for further details.}

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