Precious metals and oil rebound on Georgia crisis
Posted on 11 August 2008 with no comments from readers
With one per cent of the world’s oil supply flowing through Georgia which is now at war with neighbouring Russia it should be obvious enough that the recent dip in oil and precious metal prices is over, and that a new rally has started. Anybody buying gold or silver bullion or stocks today will make a fortune over the next few months.
This correspondent was caught out by this particular crisis. I had half suspected Israel might attack Iran, although with the Olympics going on that was unlikely. In the event Russian tanks have rolled into Georgia, apparently provoked but the timing on the day the Olympic Games started is too much of a coincidence to be unplanned.
Remember what happened after the Russian invasion of Afghanistan in 1979, its last great military adventure? This destabilized the whole region and we saw oil prices spike to $38 and gold to $850 in 1980.
Strange really that oil prices are so much higher, while gold is only marginally higher in price than in 1980 – 28 years ago. But spot the buying opportunity after last week’s chronically mistimed sell-off in commodities – or was this somebody who knew about the coming war pushing prices lower to make a killing, so to speak?
We do not know where the conflict in Georgia will lead. It could all be over quickly but this problem has been rumbling on for years and I doubt the resolution will be that easy.
If Russian might does enjoy an easy victory then that will encourage the hawks in Israel to strike Iran – perhaps before a less hawkish US president takes office next year. Geopolitics are back, big time and investors should sit up and take note, this is indeed a buying note for oil and precious metals.
Whatever happens I am sure that lows in oil and precious metals markets have been set for this year, and that from hereon the only way is up. The junior exploration stocks could rise ten-fold in many cases from their unnaturally bombed out August lows.
Most people will miss this glaring investment opportunity but why be among them?
no Comments posted by readers:
“Paulson says won’t stay at Treasury past January” I think Paulson knows that the US economy is in very dire states and using the change of administration an excuse to get out.
Whatever president comes in will want to implement his own disastrous spending policy. I still believe that the $US is doomed. Though what currency looks safe anyway? The £GDP looks set for a huge fall too.
HOWEVER, gold is now below its 200 day MA and I think there will be further weakness. I think it sensible to keep your powder dry for now.
Peter with all due respect lets not compare Afghanistan with Georgia. This relatively speaking is a minor skirmish that will resolve quickly.
The US$ has been gaining strength since China has been buying it up relentlessly over the last week, with the blessings of the FED.
Think about it, this is no conspiracy theory but why did George W agree to go to the Olympics in Beijing? The US are masters of manipulation, and will prop up their currency causing the price of gold and oil to retract. All this before the upcomming election.
Post 2009 I hasten to add could be a different story.
Since July 11th a downward trend in commodities has been in place. I’ve been long Silver Maples for most of this year and am waiting for an opportunity to purchase more Maples in 3-6 months after this dead cat bounces (USD). Because of the heavy manufacturing job losses incurred by my country this month (CAN) and the unexpected blast up of the USD, my bullion now costs 7% more – even more for Australians when compared to a few weeks ago.
When looking at fundamentals Silver/Gold seems to be the best bet with imminent fall meltdown of USA. When looking at technicals we can see that the USD has broken well above resistance and Gold/Silver well below support.
Euro over 160 and USD below 72 is bad for China as the majority of their reserves are denominated in USD. After falling 40% since 2002 it would be quite unfortunate for the USD to plunge below 70 and freefall to 62 or more. Results of strong dollar talk/action over the short term (not possible long term) will/has crashed commodities producing a short to medium correction in commodities which will be taken advantage of by large holders of overvalued USD.
co incidental isnt it .dollar rallies ivan(russians) walks into georgia.after seeing oil hit 115.this is another example of market manipulation this time by ivan whom for now had finished dumping his t bills for now.thus the the dollar bounce .ivan is clever he has paid off his debts is loaded with commodities and weapons.he will soon resume dumping his t bills buying gold and chopping oil pipe lines and turning the oil spigots to slow.we will pay for our apeasement and double standards.welcome to the new cold war.the retro seventies scenario is now complete.this is a true bear rally our russian grizzly is back.you know what to do .so do it
I see that this is all a set-up for the New Administation. The Dollar has been so low they are now calling .75 A strong Dollar? Has everyone forgot that the Euro was 89 Cents? The loone was 75 Cents? God help you, if you are still in paper assets after the new administration takes over, The True exstent of the currency and Banking Crisis will come to light. the true cost of our interventions around the Globe will come home to roust. The United States has become an Empire and all empiers have a self life. It cost to much to police the World. We are already broke and barrowing, How much do you think the dollar will be worth in Jan. 2009