"The reports of my demise are grossly over exaggerated"

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Precious Metals Blog

Friday, August 15, 2008

"The reports of my demise are grossly over exaggerated"

Recent pullbacks in Gold, silver, platinum and oil are way over
done for a couple of factors but one that I hear little about is demand.
Demand for commodities has not evaporated to the levels that should
cause this type of sell off. Given the violent moves in many areas of
commodities you would think demand is non-existent. Nothing could be further from the truth.
If anything demand is picking up in many of these areas. Future markets
try to predict future trends in supply and demand. They generally over/under
shoot both and ultimately markets adjust and get it right.
The % drops in the commodities are way undershooting the market levels
given worldwide demand. The Indians (India) are buying gold not selling.
The Middle East flush with petrodollars are buying not selling.
The Japanese are buying platinum not selling. The Chinese will resume their
expansion immediately at the conclusion of the Olympics requiring massive amounts
oil, cooper, steel, coal, etc. And while many speculators are being run out of the
commodities that is healthy for a market. The worldwide slowdown is occurring.
That is undeniable. That should slow demand but not make it disappear and these
recent moves only make sense if demand had dropped 50, 60 %. That has & will not happen.
So with fundamentals not changing, with demand remaining healthy, with changing
currencies and military tensions with Russia and Iran I would see this break
as a great buying opportunity. While the timing may be extended a bit given the recent
action, I still see $1100 gold in future on it's way to $1650.
Nothing has changed other than a move of money from one area to another. That
will reverse at a moments notice.

CRS

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