Gold finally hit $923/ oz, an all time high, Silver about to challenge $17/ oz a historic high, oil obviously flirting with $100/ barrel, all point towards momentum in this market. Last year even grains had a tremendous run wheat up some 90% or so, corn up, soybean up double digits. It is clear that we have entered a new phase in this secular bull run in commodity prices. Staying invested in metals like gold ,sliver seems like a good bet as a hedge against inflation. Federal reserve cutting interest rate is only going to fuel this rally and threat of inflation goes up. I am wondering what would be the next target for gold. Hmm…$1200/ oz by 2010 seems like an easy target. Let’s see.

>
Gold finally hit $923/ oz, an all time high, Silver about to challenge $17/ oz a historic high, oil obviously flirting with $100/ barrel, all point towards momentum in this market. Last year even grains had a tremendous run wheat up some 90% or so, corn up, soybean up double digits. It is clear that we have entered a new phase in this secular bull run in commodity prices. Staying invested in metals like gold ,sliver seems like a good bet as a hedge against inflation. Federal reserve cutting interest rate is only going to fuel this rally and threat of inflation goes up. I am wondering what would be the next target for gold. Hmm…$1200/ oz by 2010 seems like an easy target. Let’s see.

Since my previous post on momentum in commodities , the movement in commodities have proceeded pretty much as I had expected. On the successful break of $700/oz level, I had predicted higher prices this time around and sure enough gold December 2007 futures contract touched $848.50 on NYMEX (New York Metal Exchange) last week. Silver touched a high of around $16.20 / oz during Asian trading hours on 11/6, crude touched a high of $98.60/per barrel during the same time frame and USD weakened further against most major currencies.

Now I am sensing a loss in momentum in these markets and also the Yen has strengthened from around 115 to around 110.00 pretty sharply. I have a feeling this can adversely impact the carry trade (sell low interest Yen and buy high yielding currencies , commodities etc). As such we can see some profit taking/ fund liquidations in the commodity markets. I think any pullback in Gold around $750-$780/oz level would be an excellent buying opportunity, similarly pullback in Silver to $14.50/oz could be a good entry point for those who missed out the rally. Crude, I am not sure, it has already touched its inflation adjusted high whereas Gold and Silver are way off( around $2200/oz for Gold!!), I wouldn’t be surprised if crude oil stays range bound now and consolidates its gain for a while.

Some people may say these markets are getting ahead of themselves and fundamentals do not support these prices. There may be some validity to that reasoning, I am getting anecdotal evidences that high prices are causing lower demand for physical gold and attendance has thinned down in jewelery shops, particularly in major gold markets like India. This is bearish for the metals and the gold/silver bulls need to keep this in mind! Time to take some profit off the table, I know I am

>
Since my previous post on momentum in commodities , the movement in commodities have proceeded pretty much as I had expected. On the successful break of $700/oz level, I had predicted higher prices this time around and sure enough gold December 2007 futures contract touched $848.50 on NYMEX (New York Metal Exchange) last week. Silver touched a high of around $16.20 / oz during Asian trading hours on 11/6, crude touched a high of $98.60/per barrel during the same time frame and USD weakened further against most major currencies.

Now I am sensing a loss in momentum in these markets and also the Yen has strengthened from around 115 to around 110.00 pretty sharply. I have a feeling this can adversely impact the carry trade (sell low interest Yen and buy high yielding currencies , commodities etc). As such we can see some profit taking/ fund liquidations in the commodity markets. I think any pullback in Gold around $750-$780/oz level would be an excellent buying opportunity, similarly pullback in Silver to $14.50/oz could be a good entry point for those who missed out the rally. Crude, I am not sure, it has already touched its inflation adjusted high whereas Gold and Silver are way off( around $2200/oz for Gold!!), I wouldn’t be surprised if crude oil stays range bound now and consolidates its gain for a while.

Some people may say these markets are getting ahead of themselves and fundamentals do not support these prices. There may be some validity to that reasoning, I am getting anecdotal evidences that high prices are causing lower demand for physical gold and attendance has thinned down in jewelery shops, particularly in major gold markets like India. This is bearish for the metals and the gold/silver bulls need to keep this in mind! Time to take some profit off the table, I know I am