Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Who is Spreading the Virus? UK Coronavirus 2nd Wave Analysis - 30th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part II - 30th Sep 20
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Fastest US Recession Since 1946 Ignored by Stocks, Bonds and Commodities

Commodities / Gold & Silver 2009 Apr 29, 2009 - 10:38 AM GMT

By: Adrian_Ash


Gold: "Excess Scrap Exhausted" as Fastest US Recession Since 1946 Ignored by Stocks, Bonds & Commodities

THE PRICE OF PHYSICAL GOLD spiked at the Wall Street opening on Wednesday, unwinding half of this week's losses to date as new data showed the US economy shrinking at its fastest pace in six decades.

The bounce soon faded, however, knocking the Gold Price back to $898.50 per ounce by the PM Fix here in London, as world stock markets pushed higher towards 10-week highs.

Government bonds also rose ahead of today's US interest-rate decision, pushing yields lower for new investors.

"Despite a short-term rally higher," says Michael Hewson in a technical analysis for Digitallook, "gold continues to find progress above $900 extremely difficult to sustain.

"For now it seems to be trading in a range between the 200- and 50-day moving averages [$850 and $920], with no clear direction one way or the other."

Versus the US Dollar, pretty much all asset prices besides gold and Gold Futures rose Wednesday morning, with crude oil touching $51 per barrel as the broad commodity markets ticked higher and the European single currency approached a two-week high above $1.3250.

Measured in nominal dollars, US economic output fell at an annualized pace of 4.7% in the six months ending April 1st, the Bureau for Economic Analysis (BEA) said today, the worst rate since 1949.

Adjusted for inflation, the rate of contraction was worse again, showing the sharpest fall since 1946 at 6.2% annualized and equalling the recession of 1974-75 in length with three consecutive quarters of shrinkage.

Price pressures meantime pulled in two directions, with the BEA's data showing all prices across the US economy, including imports, falling 1.0% annually. Domestically-produced goods and services, however, rose 2.9% in price.

Due to announce its monetary policy for the coming month at 13:15 EST on Wednesday, the Federal Reserve has held US interest rates at a record low beneath 0.25% for the last four months running.

Advising traders not to "pre-judge" next week's rate decision from the European Central Bank – widely expected to see a new all-time interest-rate cut to below 1.0% – ECB policy-maker Lorenzo Bini Smaghi told Bloomberg overnight that Quantitative Easing such as the central banks of Japan, Switzerland, the UK and US have undertaken "would make sense only when the interest rate is at zero or very close to zero."

New data today showed European bank lending falling once more in March, while consumer expectations are now for retail prices to drop, an ECB survey said.

"The hard lending data shows that the ECB is facing a deflation problem and will have to act more aggressively," reckons James Nixon at SocGen in London.

Meantime in India, traditionally the world's No.1 source of gold demand but a net exporter during the first 3 months of 2009, "Sales indications from the recent Akshaya Thritiya festival were disappointing," notes London dealer Mitsui in its latest Refining Monitor, "and are estimated to be some 20-40% below last year's volumes, based on a higher Rupee gold price and the  economic circumstances that currently prevail."

Akshaya Thrithya, the Hindu festival celebrating eternity which fell on Monday this week, is typically marked across southern India as an auspicious occasion for Buying Gold, that near-indestructible store of wealth.

But "Although the number of people visiting jewelry shops is encouraging, volumes of gold sold is not great," says Daman Prakash of MNC Bullion in Chennai to Dow Jones Newswires, "people were buying earrings where earlier they would have gone in for chains or necklaces."

His sales this season fell 40% from Akshaya Thrithya 2008.

Following the record Gold Scrap Sales of early 2009, however, "We expect that physical demand will provide a price floor at $850," says Mitsui, "particularly in an environment of [newly] limited scrap flows."

After out-pacing investment Gold ETF flows by 2-to-1 between Jan. and March, explains the dealer in its latest report – which also shows the strongest sentiment rating amongst refining businesses in 5 months – "It has now become very apparent that the traditional physical 'hubs' have exhausted the level of scrap quantities that were evident during Q1.

"If gold attempts to move higher from here, the metal will not be fighting a similar tide of excess scrap supplies as has been the case for much of this year."

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