Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Hits Short Term High as Global Recession Sparks Risk Aversion

Economics / Gold & Silver 2009 Apr 23, 2009 - 08:11 AM GMT

By: Adrian_Ash


THE PRICE OF PHYSICAL gold held above a one-week high early Thursday in London, recording its best Gold Fix in seven sessions at $894 an ounce as European stock markets flipped in and out of the red.

"It is risk aversion that is fuelling gold's rally," said one commodity analyst to India's Economic Times today.

"The bias is on the upside," agrees Kunal Shah at Nirmal Bang Commodities, also in Mumbai, "as economic uncertainties are creeping up giving rise to risk aversion."

Yesterday the International Monetary Fund (IMF) confirmed its prediction of the worst global downturn since the 1930s, slashing its January forecast of 0.5% growth to a 1.3% contraction for 2009.

Today the Gold Price for Indian investors – the world's hungriest buyers of physical metal – ended unchanged at 14,413 Rupees on the MCX June contract.

British, Swiss and Canadian investors now Ready to Buy Gold saw the price tick back from fresh 3-week highs.

Of 182 economies tracked by the IMF, some 72 are now expected to shrink this year, including 30 of the world's 34 most developed nations.

"By any measure," the IMF warns in its twice-annual World Economic Outlook, "this downturn represents by far the deepest global recession since the Great Depression."

During the financial crisis to date, "Gold has been one of the few assets that has genuinely provided investors with diversification," notes Natalie Dempster in her latest analysis for promotional-group the World Gold Council (WGC).

"There is no intrinsic reason why gold should perform badly during periods of deflation, like equities for example, which typically suffer profoundly as the earnings outlook collapses and/or the real debt burden of companies grows.

"Traditional assets like equities and bonds are a poor hedge against inflation," says Dempster, pointing to the sharp risk that "when banks start to lend again and consumers start to spend, inflation will accelerate.

"By contrast, gold, and commodities in general, often perform at their best."

In each of the nine years since 1971 when US consumer-price inflation has exceeded 5% year-on-year, the Gold Price averaged 31% annual gains on the WGC's analysis.

"Commodities rose by 9% and bonds and equities were essentially unchanged."

For now, however, "[Gold Trading] volumes remain low and investment interest little," says Walter de Wet in today's note from Standard Bank here in London.

"A break above $905 is needed before the market could become bullish on the metal."

"The gold market still seems to be lacking momentum to push beyond the $900 mark," agrees Pradeep Unni at Richcomm DMCC in Dubai, "weighed down by stalling investment in the world’s largest gold-backed exchange-traded fund."

With the world's strongest jewelry markets becoming Net Exporters of Gold for the first time since the 1930s so far in 2009, the first three months of this year witnessed fresh record inflows to Gold ETF investment funds.

Western investors added a record 469 tonnes of gold to the ETFs' total hoard, says GFMS data, squashing the previous quarterly record of 145 tonnes and taking the total value of gold held by the largest funds to $48.6 billion.

Global stock-markets, for comparison, ended Jan. '09 worth $31 trillion according to the World Federation of Exchanges (WFE).

Gold ETF growth has since stalled, with New York's SPDR – which holds Gold Bullion in trust for shareholders paying 0.4% per year in fees – sticking at 1,106 tonnes since Thursday last week and standing unchanged from this time a month ago.

Retail-investment demand for gold also appears to be easing from the recent records, says Wolfgang Wrzesniok-Rossbach at German refining group Heraeus.

Following the dramatic bar and Gold Coin Shortage of 2008, which has forced retail premiums on even the most-heavily minted coins to 10% and above, "From next week onwards, all the larger bars (1-ounce upwards) and a little later even the smaller, minted ones should be available again for prompt delivery," he writes in his Precious Metals Weekly today.

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules