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-- Posted Friday, 27 April 2007 | Digg This Article

This morning the US GDP figures were released showing a 1.3% growth in the first quarter of 2007, contrasting estimates that had been expecting 1.8% growth.  The report went on to note that growth is slowing at the same time that inflation is remaining contained, but at elevated levels.  This growth report was the worst the economy has seen in 4 years.  We're entering a period where stagflation is becoming more and more of a reality in the market.  The question will be, can the Fed continue to walk the tight rope, balancing growth expectations while also containing inflation?  We continue to believe the Fed will err on the side of keeping economic growth going, the stimuli being their ability to cut interest rates as we move into the second half of the year.

Implats Director of Marketing (Implats is a South African platinum producer) mentioned in an interview yesterday that he knows of a big US bank that is close to announcing a new platinum ETF to the US market.  Reiterating our stance from last week, we believe the key to these ETFs eventually impacting prices considerably will be the follow on by various ETFs across numerous bourses.  A platinum or palladium ETF, should they be allowed to launch in the US, would be a huge draw on available supply in a market that is already miniscule to begin with and is only growing slightly.  For reference, annual platinum production is around 7-8 million ounces a year.  It's our opinion that platinum and palladium end users in the United States (i.e.. car makers) will never allow an ETF to fly on a US exchange.  The market is just too tight to allow for an additional demand component that could mop up all the available supply in the market.  Should it happen somewhere in the future, it will created another avenue for demand that will help to increase prices.

Buenaventura Mining put out their quarterly report last night and showed considerably lower production and as previously had been announced, dehedged nearly 500,000 ounces in the past quarter.  They stated that they are amenable to further hedge reductions this year.

Numis Securities has put out a note this AM saying that the gold price increases over the past week in the face of massive central bank gold sale increases has been quite impressive.  Scotia Mocatta has been making the same point over the past week.  The big banks are recognizing the trend we've been informing clients of for some time and when the sales stop, prices will jump.  Get your clients in the market before that and take advantage of current prices.

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 Friday, 27 April 2007 | Digg This Article

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