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
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

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