Thursday, March 19, 2009

Today in Gold: Thursday, March 19

Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:

"Commodities Jump on Inflation Concerns; Silver, Gold, Oil Surge"
Author: Millie Munshi

Main Points: The Federal Reserve's announcement that it may buy more than $1 Trillion in mortgage debt increased inflation concerns. The result: Commodities surged as a hedge against inflation.

Frank McGhee, the head dealer at Integrated Brokerage Services LLC, projects a bright future for gold and other precious metals as a result of the Fed's move. "We’ve got a massive increase in the Fed’s balance sheet, and the markets are taking it to be both inflationary and as devaluing the dollar," he said. "This reinforces the potential for hyperinflation, which would drive commodity prices higher."

So how far did gold rise? As of 12:55 pm ET, gold for April delivery was up $66.50, or 7.5%, to $955.60. This is the biggest jump since September.

Analysis: As reported yesterday, the price of gold dropped below $900 yesterday, but after hours trading indicated an expected rising price today. That clearly played out, and then some.

These are somewhat expected actions from the Fed, and it's an apparent consensus that inflation and/or a further declining economy are in the near future -- at least this year. This is an environment that greatly benefits the value of gold. This is why it is perplexing that there remain some considerably conservative projections on gold -- including the $900 average for 2009 (which was increased) that was reported yesterday.

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