Written by Michael Vass

The ripple effect from the mortgage crisis here in America continues to reverberate around the world. As in China and Asia

“With the chance that U.S. markets will be receiving another rate cut by the Federal Reseve, Hong Kong rallied and took much of the Asia markets with it. Even the Chinese banks, which are expected to raise the reserve ratio to a high of 17%, gained with expectation”

the actions by President Bush and the expectations on the Fed have affected gold prices and stocks.

“This re-iterates that in America they will do anything to stop sub-prime. It has put confidence back into the US market, and that is why guys are going out of gold.”

Even with this resurgence in confidence, and the prospect of lower rates in American and subsequently the rest of the world markets, there is still the possibility that a recession is in America’s future.

Several factors remain in the air that will influence the outcome of the economy and the price of gold and gold stocks. Sales for the holiday season, and the amount of discount being provided by retailers, are being watched closely for clues on year end and first quarter corporate numbers. Energy prices, which were recently as high as $100 dollars for a barrel of oil, has helped to put pressure on the economy as well.

“When will oil prices break thru the $100 a barrel mark? That is a question that Europe and America are considering now, even as OPEC has decided to hold production levels steady, and the question of an American recession loom on the horizon.”

Not to mention the predictions of Goldman Sachs

“Goldman Sachs said today that investors should sell gold in 2008 to take advantage of the steadying dollar.”

Yet with all of this gold rose above $800 on Tuesday. To say that speculation is in the air is the least of things. With so many factors inter-related, geo-political unknowns and the impending primary voting on the horizon there is no surprise that February gold futures contracts were recently quoted at $855.

Will the futures contracts be accurate? Will America fall into a recession? Will a Democrat be elected President? No one is quite sure, but the answers will become apparent very soon.