Gold Investments Market Update – Oracle of Omaha Warns of “Onslaught of Inflation”

Gold rose sharply in Asia and was up by more than $10 per ounce before trading even commenced on the TOCOM – it rose from $941.60/oz to nearly $960/oz but has given up some of those gains in early trading in London and is now trading back at $950/oz.

Gold and silver fell over 5% and 9% last week after surging in the previous weeks and remain up nearly 8% and 17% so far in 2009. In the short term anything can happen in all of these markets and volatility remains very high in all markets. Correction and consolidation was expected and warned of. Those using derivatives and leveraged speculation continue to get their heads handed to them on a plate and will continue to do so. Passive long term investment through real diversification is essential today.

Stock markets are again taking a pounding today with Asian and European bourses down sharply (Nikkei -3.8%; FTSE -4%) on understandable concerns about the ruptured financial system and a global recession spanning the globe. HSBC will attempt to raise $12 billion in order to recapitalize and AIG is set to be quasi nationalised with another huge injection of US funds – a $30 billion rescue. In this climate it is hard to see gold falling much below these levels and gold should be supported between $900/oz and $930/oz.

Oracle of Omaha Warns of “Onslaught of Inflation”

Legendary investor, Warren Buffett has admitted making mistakes and warned that the US economy was in “shambles” this year and “probably well beyond”. He said that reckless lending had caused the worst “freefall” he ever saw in the financial system which had made investors “bloodied and confused”.

Mr Buffett also warned that the greater reliance on government aid was likely to lead to unwelcome and lasting consequences for the wider economy: “In poker terms, the [US] Treasury and the Fed have gone ‘all in’. Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome after-effects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation.”

Gold has proved itself a safe haven asset in the worst deflationary slump since the 1930’s (as it did during the Great Depression). Should the ‘Oracle of Omaha’s’ warnings of a vicious bout of inflation come to pass then we will likely see gold really come into its own and likely see it perform as it did in the 1970’s when it rose from $35/oz to $200/oz, then fell to $100/oz consolidated and then surged to over $850/oz. As ever investments can fall as well as rise and important that investors do not have all their eggs in any one basket – including the gold basket.

Mark O'Byrne

Also on news-goldcore-com

Videos

Gold and Silver Chart Analysis January 2023 with Patrick Karim

Gold, Rate Hikes and The Central Bank Illusion?

Top 5 Gold Buyers’ Motives Revealed

Blog posts

US Federal Reserve Sticks To The Script But For How Long?

Those watching the gold price and price of silver will have noticed the sharp uptick following the Federal Reserve’s announcement, yesterday. This was despite the Fed doing exactly what everyone expected them to do. For now, the Federal Reserve is sticking to its relatively well-telegraphed plan but how long will it be until they need […]

READ MORE

China and the US at sovereign debt war

US dollar hegemony has long been a standard feature of the global financial and economic system. But developments in recent years and months (weeks, even) suggests there are more than a handful of countries who are looking to rely less on the US dollar. Instead countries who have long been at the mercy of the […]

READ MORE

What happens if the debt ceiling raises

It’s that time again when the US government has to prepare itself for an internal battle to raise the debt ceiling so it can meet various obligations. This is a merry dance that has been danced before, as we mention below. For sure, every time it happens fewer and fewer people are convinced of the […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

Gold and Silver Chart Analysis January 2023 with Patrick Karim

Gold, Rate Hikes and The Central Bank Illusion?

Top 5 Gold Buyers’ Motives Revealed

Blog posts

US Federal Reserve Sticks To The Script But For How Long?

Those watching the gold price and price of silver will have noticed the sharp uptick following the Federal Reserve’s announcement, yesterday. This was despite the Fed doing exactly what everyone expected them to do. For now, the Federal Reserve is sticking to its relatively well-telegraphed plan but how long will it be until they need […]

READ MORE

China and the US at sovereign debt war

US dollar hegemony has long been a standard feature of the global financial and economic system. But developments in recent years and months (weeks, even) suggests there are more than a handful of countries who are looking to rely less on the US dollar. Instead countries who have long been at the mercy of the […]

READ MORE

What happens if the debt ceiling raises

It’s that time again when the US government has to prepare itself for an internal battle to raise the debt ceiling so it can meet various obligations. This is a merry dance that has been danced before, as we mention below. For sure, every time it happens fewer and fewer people are convinced of the […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE