Morning Perspective: Gold Shining Brightly

Bloomberg reports gold is off to its best start since 1980 amid tensions in the Middle East, high oil prices, and a weaker dollar. Gold futures in London rose $17.84 an ounce, or 2.1% to $876. The previous high was $868.89, set last week. The performance comes a day after the U.S. said five Iranian boats harassed U.S. warships in the international waters of the Strait of Hormuz. Further, in combination with weakness in the equity space due to subprime concerns, one analyst stated there are many supportive reasons and not many reasons to sell. Read Professor Prieur du Plessis’ article Gold Shines Brightly To Start 2008.

From the Bull Pen: Gold bulls may look to the gold ETF (GLD) and Gold Fields (GFI); near-term sell-stops below $83.50 and $15.50 respectively.

From the Bear Cave: Gold specialist Professor Lance Lewis warned of shorting companies in a rising sector. A safer downside bet may rest in the GDP sensitive base metal miners. Bears may play the downside in Southern Copper (PCU), buy-stops above $112.


Medicare Surges

WSJ reports Medicare spending in 2006 grew at its fastest rate in 25 years. The increase was due in part to the drug benefit added to the federal health-insurance program for the elderly, which accounted for $41 bln. Overall, health spending in 2006 increased 6.7% to $2.1 trln in 2006, approximately 16% of gross domestic product. The previous increase was 6.5% in 2005. Professor Kevin Depew mentioned the healthcare space in his article Five Themes You Need To Know For 2008.

From the Bull Pen: Professor Depew mentioned plays in Magellan Health Services (MGLN) and Pediatrix Medical Group (PDX). Sell-stops may be set below $43.78 MGLN and below $67 for PDX in the near-term.

From the Bear Cave: Bears may see a head and shoulders pattern tracing out in United Health (UNH), confirmation on a break of $55.25.


Click on Minyanville's Stocks To Watch for more company-specific ideas.


Quick Check Around the World

The Turnaround Tuesday ticks are lined up at the gate as Asia is mixed and Europe is skewed higher.

Asian trading closed with the Hang Seng -0.25%, Nikkei +0.19%, Sensex +0.29%, Taiwan +1.01% and Shanghai -0.13%.

A quick check of European bourses finds the CAC +0.87%, DAX +0.55%, FTSE +0.48%, ATX +0.96%, Swiss Mkt. +1.64% and Stockholm +0.01%.


A Look At Commodities

Commodities are up this morning. Crude oil is up +1.52 to 96.60. Gold is higher +14.10 to 876.20. Silver is off -0.166 to 15.180, and copper is up +5.50 to 318.00.

The dollar index is lower -0.068 to 76.110.

As of 8:45 AM EST, S&P and Nasdaq futures are higher by 8.20 and 9.75 points, respectively to 1429 and 1985.

On the Radar

Economics

10:00 Pending Home Sales: -0.5% cons
3:00 Consumer Credit: $8.5 bln cons

Click here for the full trading radar. 

Have a great day today. Good luck!

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