Monday, March 14, 2005
Steel Prices, Iran, and Gold
Current prices are likely to be revised in April. Steelmakers have raised prices to automakers by 5-10% over the past 2 years. Latest increases will raise prices to levels seen prior to the nearly 30% reduction that took place after NSANY began cutting costs in 1999.But there is no Inflation!
Iran and Italy signed an economic cooperation protocol worth three billion euros here Thursday night, based on which the Italian government is urged to provide Tehran with industrial machinery upon request, in return for Iranian oil.What, no mention of USD's! Every agreement that is signed will make it harder for the US to pressure Iran to give up nuclaer weapony.
Here's Saw an interesting chart showing the relationship between the price of Gold and the price of Oil. You can see In the late '90's Gold was 25 times the price of Oil, 15 times is probably the mean for 30 years, and today it is 8 times! The last time it traded at 8 times was in 2001, when Gold was about $250 per ounce.
IMO, we will see Oil at 100-120 per barrel. We know that the mine supply of physical gold is in deficit of 40% compared to world demand (roughly 2,500 ton mine supply vs. 4,500 ton annual demand) and the mine supply is decreasing each year. At 8 times Oil, Gold will sell at a minimum of $800 per ounce.