-- Posted Monday, 23 July 2007 | Digg This Article
As we near the end of June and July and move past a time during the year when gold is traditionally flat or decreasing due to lack of investor demand, we see $700 gold on the horizon. Helping to boost the price of gold continues to be the ailing dollar, which is still around all time lows against the Euro and has weakened against the Yen.
The sub-prime mortgage fall-out and overall weakness in the U.S. economy has driven investors towards safer assets, such as gold.
The price of oil has increased to over $75 a barrel and should test a high of $78 in the coming weeks.
If gold can pass the next resistance point of $693, the $700 psychological barrier will be breached shortly there after. Then it will be on to the 26-year high of $730 an ounce. During this run, prices will be subjected to profit taking, however, these slight ticks downward should be viewed as buying opportunities. Blanchard is predicting $700 gold in September, should the price hold at these levels until mid-August.
The Oil and Gold Ratio
Over the years, oil and gold have had a strong correlation with one another. That should not surprise anyone, as gold is a hedge during inflationary periods and the price of oil directly impacts the CPI and PPI indexes.
Over the last 35 years, the oil and gold ratio has averaged around 18:1. Currently, the ratio is 9:1. Should this correct and the ratio increase to 18:1, based on today’s oil price of $75.50 a barrel, the spot price of gold should be about $1,359. That's something for investors to think about.
Oil is also creeping towards its all time high of around $78 a barrel. Gold still has some ground to cover to get close to its all time highs - yielding the fact that there is still plenty of time for investors to get into the gold market and benefit substantially.
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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.
