"Will there be a recession or not?" asks Mary Anne and Pamela Aden. In The Aden Forecast they note, "The scales are now tipping to inflation," which they view as bullish for gold and silver.
"Sure, the economy will probably slow down in the months ahead and stagflation is also a likelihood. That is, slower economic growth combined with inflation.
"The Fed and the world's largest central banks are working together in a massive, historical concerted intervention to provide all the money and liquidity that's globally needed to keep things rolling along. Money supply, for instance, is soaring at a 16% growth rate, the most in 47 years.
"The latest producer price figure strongly supported our view since it was the highest in 34 years, showing inflation running at a 38% annualized rate. Since producer prices lead consumer prices, this is a huge red flag that big inflation is coming.
"The new record high in the gold price is telling us the same thing, and so are the record highs in oil and the commodity markets. In other words, if a serious recession were coming, gold and commodities would not be soaring.
"Gold is an inflation barometer and the action in this market alone is signaling that inflation will very likely dominate the economic scene in 2008. Inflation is bad for bond prices. It usually means higher interest rates and this time is not an exception.
"The turmoil in the credit markets has also been bullish for gold. Since it's widely expected that this will result in lower interest rates to help boost the economy, it'll mean an even weaker U.S. dollar. And since gold and the dollar move in opposite directions, the declining dollar has been a big plus for gold.
"Gold has also risen due to its safe haven status in reaction to growing international uncertainty and tensions. For now, gold is super strong above $840 its rise will remain in force with gold above $800. It's very likely that gold's upward momentum will now continue to build and if it does, it wouldn't be unusual for gold to approach $1000 in the current upmove.
"Long-term investors should continue to buy and hold the gold and silver ETFs -- streetTracks Gold Trust (NYSE: GLD) and iShares Silver Trust (ASE: SLV). Among individual gold and silver mining shares, investors can buy new positions in Yamana Gold (NYSE: AUY) and GoldCorp (NYSE: GG)."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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