The University of Michigan reported that consumer sentiment fell in June to an 18-year low and frankly we are not surprised.
There is growing evidence that consumer spending is waning with each week that energy and fuel prices continue to stay high. Credit card usage is also falling because borrowers are "Maxed Out" and there is very little disposable income at the end of the month for non- necessities.
Inflation, the rising cost of living and the undermining of the purchasing power of the dollar has taken a deep toll on the psyche and the pocketbooks of millions of Americans. No wonder investors all over the world have been turning to gold and silver as safe havens over the past couple of days.
On June 25, Doug Casey had one of his guru moments, sending an email to the editorial staff in which he said he felt that gold had bottomed. While we will need a lot more time to pass before handing him a cigar, yesterday, Thursday, June 26, gold came roaring back to life… up over $31. On Friday gold rose another $10 an ounce and silver closed at $17.48, up almost 3% on the day.
Meanwhile, the DJIA closed off 388 points on the news that… well that pretty much everything that can go wrong is, in actual fact, going wrong. The Dow is down 20% from an October 2007 intraday high.
Oil hit nearly $143 and doesn't seem to want to stop going up until it hits the anticipated $150 a barrel by the 4th of July. "The renewed attraction of commodities as an investment vehicle is contrasting with the unattractiveness of the stock market," analysts Ritterbusch and Associates said in a research note. "As additional traders abandon the stock market, the appeal of commodities as a trading vehicle is enhanced."
Oil prices have jumped more than 45 percent this year, extending a six-year rally, as supply struggles to keep pace with rising demand from emerging economies, such as China and India.
Additional support has come from a flood of cash from new investors buying up commodities to hedge against inflation and the weak U.S. dollar, which fell further on Friday.
While consumer and investor sentiment continues to sour, smart investors are loading up on the hard assets like gold and silver. The ETFs such as GLD and SLV are also under accumulation.
By the way, the gold and silver producing companies have had two fantastic days in a row. Some of favorites like Yamana (NYSE:AUY), Barrick (NYSE:ABX), Hecla (NYSE:HL), Silver Wheaton (NYSE:SLW) and Pan American Silver (Nasdaq:PAAS) have all gone up in two giant steps that signal an new buying frenzy has begun in the miners and precious metal stocks.v
