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Blanchard Economic Research Note



-- Posted Wednesday, 11 April 2007 | Digg This ArticleDigg It!

Another set of bullet points about the market today:

ECB gold sales were updated again this morning and the increases in sales have continued.  This past week there were roughly 12.1 tonnes of sales into the marketplace from two captive central banks in Europe.  In the last month, the gold market has seen 57.6 tonnes of sales.  This compares to the previous month of less than about 10 tonnes of sales in total.  The gold market hasn't seen this level of sales since 75 tonnes were sold into the market in May '06 and the gold price cratered over $100 per ounce.  In the month since the increases in sales began, gold has increased in price by over $40 per ounce.  In the past, significantly increased sales meant the market would have a bout of price weakness.   This has been the opposite case the last month.  There is no more bullish factor for this market in our opinion than to see how robust the physical demand is at present while it continues to gobble up the major increases in bank sales and trend higher.

US energy inventory numbers come out at 10:30 AM EST.  As is always the case, drastically different numbers than estimates for gasoline and crude oil inventories will affect energy markets and conversely the precious metals markets.  Gasoline inventories have been falling drastically over the past few weeks, which is not a good sign heading into the summer driving season.  Should we see another unexpectedly large draw on gas supplies, look for  the energy markets to go for a jog upwards and take precious metals prices with them.

There is a rumor circulating today that private equity is now looking at which gold mining companies to take private.  The rumored target is Gold Fields of South Africa, the fourth largest gold producer.  The reason listed behind the rumor is that the PE group believes we will have $1,000 gold prices in the next few years.  Problem is that the PE group is headed by someone no one has ever heard of supposedly based in San Francisco and there is no actual basis supporting the rumors.  It's a fun rumor and will be interesting to see how it affects the markets, but the lack of any factual support combined with my own high doubts that PE would get involved with mining companies because of the enormous input costs means it's just that; a fun rumor.

Finally, the Fed minutes are released this afternoon.  Markets will move because of one thing, they're the Fed minutes.  The debate will begin anew this afternoon about growth vs. inflation and possible stagflation or recession.  There will be a mix of opinions and we'll see if there is anything that can get gleaned from the minutes about the Fed having a hawkish or dovish bias towards interest rates.

 

Blanchard and Company, Inc. is the largest and most respected retailer of American rare coins and precious metals in the United States, serving more than 450,000 people with expert consultation and assistance in the acquisition of American numismatic rarities and gold, silver and platinum bullion. The Blanchard Economic Research Unit is a key source of precious metals market analysis and continues to be an important resource for financial and consumer media throughout the United States. Blanchard and its predecessor companies have called the New Orleans area home for more than 30 years. For more information about the company, visit BlanchardGold.com or call the company toll free at 1-800-880-4653.


-- Posted Wednesday, 11 April 2007 | Digg This Article




 



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