Jim Cramer Calls Gold a Currency

Pinnacle Digest writes: Commodities dropped this morning on continued weak factory output data from China and Europe’s private-economy contracting at the fastest pace in 3 years, according to Adrian Ash.


Despite the weak economic numbers in China and Europe, gold still remains within 1% of its 7 month high in dollars and within 1% of its all-time high in euros.


Weak data from China and Europe has typically spurred a flight to the USD and consequently hurt gold in recent months. However, we haven’t seen any sign of that this time around.


"While the uptrend [in Dollar gold] is still intact, price action is lackluster and we have been moving sideways for the past 4 sessions," notes Russell Browne, strategist at Scotia Mocatta in his latest technical analysis.


The resilience in gold’s price hasn’t been seen in crude prices however. Overnight in Asian trade, "There was another significant flushout" in crude oil prices, says Alex Thorndike, senior precious metals trader at MKS Capital in Sydney – now down to a 6-week low.


Crude’s price may be very indicative of things to come for the global economy. If you remember earlier this week, FedEx released some very disappointing results. In fact, they missed a downwardly revised earnings target and are projecting much weaker economic activity. UPS and FedEx parcel activity is typically a great indicator of future economic activity. FedEx has already stated it will be looking to take some planes out of service and perhaps offer some employees buyout packages.


Economic ‘doom and gloom’ aside, Adrian Ash highlights some interesting comments from Jim Cramer about gold.


Going further, "Gold is the only currency," said CNBC TV host, self-declared entertainer and educator Jim Cramer to TheStreet.com – the financial site he co-founded in 1996 – on Wednesday.



"People say to me, 'What is the one currency you can trust?' I come back and say, 'Gold, because there is such a tremendous scarcity.'



"People regard it as a precious metal. I think that's the wrong call."


If the mindset that gold is a currency takes over in the general investing population, lookout. We won’t need further quantitative easing to see its price skyrocket to record levels.


Click here to read Adrian Ash’s latest report with further information on the issues mentioned in this summary and much more.