-- Posted Thursday, 19 July 2007 | Digg This Article

At a time when gold is traditionally slow, the market is showing significant strength.  Gold broke through $670 yesterday, a key psychological level.  Here’s why:

• Fed Chairman Ben Bernanke’s statements to Congress regarding the continuing sub-prime mortgage debacle and housing in general are cause for concern.  Bernanke says that housing foreclosures will continue to rise and the correction that is taking place within the housing market will likely take longer than anyone previously expected.  This news pushed the dollar down even further against the Euro.
  
• Ben Barnanke stated that the Fed’s main concern is still inflation. Although the numbers slightly improved during the month of June, Barnanke is still very cautious and is concerned that this will not be a long-term trend. This caused the dollar to fall and gold to increase over $7.00.
  
• Investors are seeing gold as a safe haven.  When the economic outlook for the economy, and paper assets in general, are uncertain, investors turn to gold as the currency alternative because of its strong profit potential and stability during times of economic volatility – which they are doing. Take for example the Bear Stern hedge fund and its failure – investors are looking for stable and sound investments, and gold is one.
  
• US crude oil is approaching $76 a barrel this morning and could test all time highs by next week. Crude prices are also increasing today due to news that the Chinese economy continued to increase during the second quarter, expanding by almost 12%, while Chinese oil imports in the first half of the year were up over 11% year-on-year. Supply concerns linked to geopolitical tensions in Nigeria and the Middle East, strong oil demand forecasts from OPEC and North Sea supply constraints are also adding speculative buying.
  

There is a lot of information out there including concerns over the economy, higher oil prices, potential mining strikes, and the vulnerability of the dollar against major currencies around the world, which will continue to push gold higher. Blanchard continues to support its prediction of $700 gold in September.

Expect some mild corrections from time to time as we push ahead to the next level. These corrections will only be temporary.  While it may seem unusual, investors tend to diversify their investments with gold and precious metals when the prices climb as opposed to when prices are contracting.  What we’re seeing now is more investors getting into the market at a time that is usually quiet, and Blanchard sees this as a very strong signal that prices should be very impressive as the summer months pass and the traditionally strong fourth quarter begins.

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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.

-- Posted Thursday, 19 July 2007 | Digg This Article

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