Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
The Three M's of Hyperinflation : Milosevic, Mugabe, And Maduro - 26th May 19
Global Multi-Market / Asset Charts Review - 26th May 19
An Oil Shock Could Be the Black Swan That Finally Drives Gold Higher - 26th May 19
Brexit Party Forces Theresa May to Resign, Boris Johnson Next Tory Prime Minister? - 26th May 19
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
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

Market Oracle FREE Newsletter

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

Gold Nears New Euro Record High

Commodities / Gold and Silver 2010 Mar 19, 2010 - 07:21 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD was little changed for US investors in London on Friday, heading for a 2% weekly gain as the Dollar rose against everything on the forex market but the commodity-currencies of Canada and Australia.

European stock markets pushed 1% higher from last Friday's close, while Euro and Sterling bonds both fell with their currencies.


Gold priced in Pounds neared its second-highest ever weekly close at £743 an ounce, just shy of the £750 finish hit a fortnight ago.

The gold price in Euros rose within 1% of March 5th's all-time peak at €838 an ounce.

"Many of the Western countries with fiscal problems have large gold reserves, while the developing countries with rapidly accumulating foreign exchange reserves hold very little gold," says Nic Brown's research team at French bank Natixis.

Noting "suggestions" reported by Reuters this week that Eurozone central banks might "pool" their gold reserves to back a European Monetary Fund aimed at rescuing Greece from its fiscal crisis, "At some point this equation may lead to the transference of gold from developed to developing countries as part of a more global solution to the growing fiscal problems that the world currently faces."

"Just as the [International Monetary Fund] is in the process of selling some of its gold reserves, so an EMF might ultimately find itself in a similar position."

Already in the last five years, analysis by BullionVault showed on Wednesday, emerging-market states have bought 994 tonnes of gold for their reserves, equal to nearly half of the 1881 tonnes sold over the same period by developed-economy OECD members. (Read: He Who Has the Gold here...)

"Gold is quietly, at the edge, becoming the world's second reservable currency, supplanting the Euro and rivaling the Dollar," says Dennis Gartman in his eponymous advisory letter.

"The trend shall continue months, if not years, into the future."

"Unsurprisingly," Natixis' Commodities Weekly goes on, "the rumors [of a gold-backed EMF] were quickly rebuffed by the Bundesbank." Germany has the world's second-largest official gold hoard behind the United States, giving it "a traditional and deeply rooted attachment to its gold as a safety net."

Eurozone central banks currently hold a total of 10,832 tonnes of gold bullion, worth some €289 billion ($392bn) – only just equal to Greece's outstanding debt, and less than the Eurozone's current-year fiscal deficit across all of the 16 members.

World Gold Council analyst Rozanna Wozniak confirmed to Reuters yesterday that the mining-backed marketing and research group expects central banks as a group to continue buying gold in 2010.

New York's CPM Group forecasts a net rise of 187 to 218 tonnes in global central-bank holdings this year, says Bloomberg, adding to 2009's net addition of 645 tonnes.

"Using the IMF rather than a new EMF [to held Greece] might seem preferable for the Euro," writes Steven Barrow, chief currency strategist at Standard Bank today, "given that the no-bailout rule would remain unscathed."

European Commission president Jose Manuel Barroso said today that turning to the IMF "is not a question of prestige, it's a question of seeing what is the best way to respond to the situation."

"[But] what would happen if other – larger – countries like Spain and Portugal start to need the same sort of support?" asks Barrow. "The last few months show that Euro weakness goes hand in hand with wider bond spreads [between different Euro-members' sovereign debt] and we doubt this is about to change.

"Hence an IMF solution for Greece, while it might initially lead to a 'relief' narrowing of bond spreads, should cause wider spreads over the slightly longer-term – and a weaker Euro."

Typically moving together with the Euro against the Dollar, the gold price for US investors has now shown a negative correlation with the 16-nation currency for four weeks running, the longest stretch since March 2009.

Averaging a one-month rolling correlation of plus 0.52 since the start of Jan. 2000, daily changes in Gold and the Euro have shown a negative correlation – meaning they move in opposite directions – of minus 0.26 since this time last month.

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