Over the summer we mentioned that gold might hit $500 by year’s end. And it looks as if we are going to be right on target.
Today gold surged above $490 for the first time since 1987 on the COMEX. These record prices further validate Wealth Daily’s bullish outlook towards the yellow metal.
And it looks as if the upward trend will continue over the next few days.
Gold will most likely meet support at $484 with a bit of resistance at $492 today.
Today’s highs came after reports of strong demand and major fund buying.
Earlier this month gold demand appeared dried up around $455 an ounce. But over the past two weeks the yellow metal has seen a renewed surge in investor interest.
Futures have since risen by some 12% in the past four months and up over 50% over the past three years.
Last week the World Gold Council reported that global gold demand in the third quarter of 2005 rose 7% from the year-ago quarter.
And that demand is expected to continue rising. With Christmas right around the corner, demand for jewelry could push gold up over the $500 mark.
Gold is riding on its own fundamentals and ignoring recent gains in the dollar against other currencies.
At last look Gold was holding steady at $488.
The Collapse of GM
As I told you last week, GM’s got problems. Big problems. And today I want to give you a quick follow up to the story.
Today the once-celebrated automaker announced that it will eliminate 30,000 manufacturing jobs and close 9 North American assembly, stamping and powertrain plants by 2008.
These layoffs and closings are a last ditch effort for GM to get production in line with demand and return the company to profitability and long-term growth.
The company said it plans to achieve $7 billion in cost reductions on a running rate basis by the end of 2006.
GM is plagued with several predicaments. And I don’t believe that the company will recover on it’s own.
Like I told you last week, the company has been bled by high labor, pension, health care and materials costs as well as by sagging demand for sport utility vehicles, its longtime cash cows, and by bloated plant capacity.
The company’s market share has taken a beating worse than Mike Tyson’s bank account.
GM lost nearly $4 billion in the first nine months of this year. Not a pretty picture.
The automaker could be also facing a strike at Delphi, which filed for bankruptcy protection last month. GM, which spun off Delphi in 1999, could be liable for billions in pension costs for Delphi retirees.
And if things weren’t bad enough for GM, the company is also is under investigation by the SEC for accounting errors.
So what does all this mean for GM? In one word…Fold.
There’s only one way out of this mess for General Motors. And I don’t like it.
That’s if the U.S. government bails the company out.