-- Posted Tuesday, 10 July 2007 | Digg This Article
Today at noon, Fed Chairman Ben Bernanke will be speaking about the future inflationary outlook to a group of economist in Massachusetts. Hopefully, at the end of the meeting, we will have a better understanding on the future outlook of inflation and what the inflation target will be going forward. Currently, the core inflation (which does not include food and energy prices) is rising at a rate of 1.9%, which is within the 1-2% unofficial rate range set forth by the Fed. However, the headline inflation number (rate at which the cost of living is rising) is increasing at a rate of 2.2%, which is higher than unofficial rate range. Because of this pressure mounting, Bernanke will be forced to show his hand and his comments will have a direct effect on the price of gold.
Analysts are predicting that he will hint at a future rate increase to combat inflation, which under a normal situation would be a signal that the dollar will strengthen, however, analysts have been predicting this for a little while now, and a future rate cut may already be factored into the dollar index. If he does mention a rate increase, expect gold to drop right after, however, it is only temporary and gold will continue to climb it ways up during this typically slow period. If Bernanke does not mention a rate increase, the dollar will continue to fall below its current two and a half year low.
If the price of gold can sustain these levels until the middle of August, we will see gold break through $700 by the end of September and continue higher from there.
*************************************************************
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 www.BlanchardGold.com
or call the company toll free at 1-800-880-4653.
