Gold, Platinum Hit Highs Against Falling Dollar

From Staff Reports

Gold hit a 28-year high yesterday (Monday), on the back of rising energy costs and a falling U.S. dollar.

Gold futures for December rose 1.3% (or $9.80) to $763.60 an ounce on the New York Mercantile Exchange. The most closely watched of the precious metals is up 20% this year, and is on track for its seventh consecutive annual gain. Gold has traditionally been viewed as a hedge against inflation; with prices of such key commodities as oil rising steeply, gold is rising, too.

"The dollar continues to weaken," Dennis Gartman, economist and editor of the Suffolk, Virginia-based Gartman Letter, told Bloomberg News. "Crude oil and other commodity prices continue to rise. And under those circumstances, gold shall continue to move from the lower left to the upper right on the charts."

Other metals also are soaring. Platinum hit a record high of $1,409 an ounce amid supply concerns and power outages in South Africa. And silver futures for December rose 1.2% (17.2 cents) to $14.075 an ounce.

Inflation and credit concerns will continue to push precious metals skyward, analysts say, providing investment opportunities in both metals and agricultural commodities.

Commodities are also a good play when financial markets are unpredictable and when inflation is expected to remain in the picture. And the best of those commodities are precious metals, such as gold. [For our free Money Morning investing report, "Four Ways to Beat the Credit Crunch and Profit From Global Growth," which includes a gold play and three other high-profit-potential investments, please click here.]

In terms of our recommended gold play, if you think the central banks will continue to print money to solve the credit crunch - they already are, and we believe they will continue to do so - you really need an inflation hedge, which means the StreetTracks Gold ETF (GLD). Though gold has recently been trading in the range of $740 an ounce, some analysts, including our own Director of Global Investing Research, Martin Hutchinson, think that a price of $1,000 an ounce is possible - if not downright likely - in the next 6 months.

Despite our near-term concerns about China, Asia is still a highly promising market. [In fact, if you aren't yet a Money Morning subscriber, sign up now and receive - free of charge - our 6,000-word research report, "The Three Best Investments in Asia Today," by clicking here.]

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