Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Ticks Higher as Chinese Savers Hit by Negative Interest Rates

Commodities / Gold and Silver 2010 Mar 11, 2010 - 06:11 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF WHOLESALE gold bullion ticked higher early Thursday for Dollar investors, but slipped further for Sterling and Euro buyers as world stock markets again held flat together with commodities.

Government bonds fell, pushing the yield offered by 10-year UK gilts up to a 2-week high of 4.14%.


Ten-year US Treasuries offered 3.74% p.a., more than three-and-half percentage points above the yield offered by short-term debt.

"With a US rate hike likely within the next six months, gold may be in for a tough time if it does not find some direction shortly," reckons one London dealer in a note.

"There are lot of buy orders below $1100," counters Pradeep Unni, senior analyst at Richcomm Global Services in Dubai, speaking to Reuters.

"If we don't find any clarity with respect to Greece and neighboring nations, gold will continue to fight bearish pressure."

Greek public services were once again closed by a national strike on Thursday. Typically moving together against the Dollar, gold and the Euro in fact split apart when the Greek budget crisis first broke at the start of Feb.
 
Initially seeing Dollar-gold prices rise while the Euro/Dollar exchange rate fell, gold now stands flat from the start of March, while the Euro has added 2¢ to $1.3650.

On a rolling one-month basis, the daily correlation of gold and the Euro – averaging a strong +0.51 over the last decade – fell this week to minus 0.35, its most negative reading since March 2009.

"Gold priced in Euros and Sterling reached record high levels [last week], suggesting the market is worried about falling currency values," notes the March Metal Matters report from bullion bank Scotia Mocatta.

"Funds and ETF investors have started to buy into the price rebound, which suggests another significant up leg could be starting.
 
"Given the latest fears in the market are about sovereign debt, it seems as though gold prices could have further to climb."

Today in China – a close second to India as the world's largest private buyer of physical gold – new data today showed consumer-price inflation jumping in Feb. as food prices leapt more than 6%.

"A growing number of households will realize their deposits in the banking system are losing purchasing power," says Deutsche Bank's chief China economist, Jun Ma, "because the real interest rate is now negative."

Chinese real interest rates – accounting for inflation – were last below zero in late 2006.

Real US interest rates sank below zero for the third time in 7 years last November. Cash savers in the UK have lost real purchasing power across each of the five, ten and 15 years according to data from the Investment Management Association.

"Confidence in not only the Dollar but other currencies is declining, and people are looking for a place to put their money," said Rob McEwen, chairman and CEO of US Gold – and founder of world No.3 gold-miner Goldcorp – speaking this week to Business News Network at the PDAC mining conference in Toronto.

Repeating his forecast of $2000 gold by the end of 2010 – and $5000 an ounce by the bull market's peak – "It's just gonna happen," McEwen laughed.
 
"You have governments around the world that are printing money. The debt levels are going up...Gold mining supply adds about 1% per year. The money supply is expanding by greater than 8% per year right now."

Asked about the likelihood of governments worldwide reining in spending and money-creation, "Good luck to them!" McEwen said.

"If interest rates rise, our prospects plummet," writes London Times columnist and economic consultant Anatole Kaletsky today.

"Fighting inflation used to be the touchstone of economic policy. But this dusty old orthodoxy must go. [UK] interest rates will have to remain low...certainly no higher than 1-2%...not just for the rest of this year, but until 2014 or 2015."

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly 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 www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

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.


© 2005-2019 http://www.MarketOracle.co.uk - 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