Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Up, U.S. Dollar Down on Risks of Hyper-Inflation

Commodities / Gold & Silver 2009 Jul 01, 2009 - 07:05 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE WHOLESALE PRICE of investment gold jumped as the New York opening drew near on Wednesday, recovering most of yesterday's $20 drop as the Dollar fell on worse-than-expected US jobs data.

Kicking off the second-half of 2009 more than 7% higher from New Year's Day for US investors, gold had earlier recorded a one-week low for UK and Eurozone buyers at the AM Gold Fix in London.

European stocks rose sharply, while US crude oil broke back above $71 per barrel.

The S&P stock index closed last night 1.7% higher from the start of the year.

London's FTSE100 ended the first-half some 4.0% lower, as did the Gold Price in Sterling.

"The US central bank has structured and introduced policies without considering exponential credit growth and its consequences," says investment manager and author Marc Faber in an interview with the Korea Times today.

Recommending inflation-friendly assets such as equities and Gold Bullion, "The United States will not raise interest rates for many years to come because it needs to pay off its huge debts.

"In turn, too much money in the economy will raise costs of everything, including healthcare and education, giving rise to hyperinflation."

Confirming the US central bank's policy stance, "Let this not be another 1937, but a time when policymakers have the wisdom and patience to nurse the economy back to health," said Janet Yellen, president of the San Francisco Federal Reserve Bank, on Tuesday.

Speaking in California – where yesterday's failed State budget meeting means that Controller John Chiang will now issue $3.4 billion in I.O.U.s in lieu of cash – "I'm more concerned that we will be tempted to tighten policy too soon, thereby aborting recovery," Yellen said.

On the data front this morning, China reported a fourth month of increased manufacturing output, while the rate of decline in Europe slowed.

Across the 16-nation Eurozone, the Purchasing Managers Index (PMI) – a measure of business conditions in manufacturing – gave its best reading since Oct., but continued to signal falling output for the 13th month running.

The decline in UK services output slowed to its smallest drop in six months.

America's private-sector ADP Payrolls report, in contrast – a proxy for the official Non-Farm Payrolls report due on Thursday – showed a much sharper-than-expected loss of US jobs for May, taking the 2009 total to 3.4 million so far.

"This has been a government-induced rally" in the stock market, reckons $110bn fund manager Jordan Irving at Delaware Investments in Philadelphia, speaking to Bloomberg.

"We need to see some real positives coming from internal demand, as opposed to government-related demand, and it's just not there."

Data from the newswire shows US investment-grade debt returning 9.2% to investors over the first half of 2009, beating government bonds by 13.7 percentage points as Treasury debt suffered its worst sell-off in three decades.

Back in the gold market, the second quarter of 2009 saw volatility in Gold Prices – a strong deterrent for jewelry and investment buying in Asia and India – fall sharply in all currencies.

Most particularly, daily volatility in the Gold Price in Euros, which cuts out the "noise" of US Dollar forex volatility, has now retreated to its lowest level in 20 months, falling by almost four-fifths from the record peaks of Oct. '08.

"Demand from the jewelry sector seems to have stabilized, partly based on the expectations that the price is going to pick up," said precious metals analyst David Wilson at Societe Generale this morning to Reuters.

"The physical buyers are getting used to the higher price range and looking at any dip as an opportunity."

Demand from the world's hungriest gold market, India, remains subdued however, as the summer lull in religious festivals and weddings wears on.

"Sales have been bad for the earlier part of the year," says one dealer in Mumbai. "Only a correction below $900 per ounce could see interest re-emerging," says another.

The Bombay Bullion Association puts Indian gold imports at 8-10 tonnes for the first 3 weeks of June, compared to 17-18 tonnes during the same period last year.

Gold imports to Turkey, in contrast, jumped in late June as scrap sales dried up says the Istanbul Gold Exchange.

"About 80 tonnes of gold were collected by jewelers" between Jan. and May reports Hurriyet.

"In the first five months of 2008, gold worth $1.5 billion was imported. This year, that figure declined to $1.95 million [but] due to falling prices, the country’s imports began to climb over the past three weeks to stand at $125 million."

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