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
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
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

Silver Plunges 10.5% as Margin-Hike Bites

Commodities / Gold and Silver 2011 May 03, 2011 - 12:13 PM GMT

By: Adrian_Ash


THE PRICE OF GOLD hit new all-time Dollar highs at the AM London Fix on Tuesday, while silver traded near a two-week low, world stock markets slipped, and commodity prices fell hard.

An early rise in global equities faded as the Reserve Bank of India today hiked its key interest rate and Euozone factory input-price inflation showed a surprise rise.

Gold-up-silver-down has occured on fewer than 14% of all trading days since 1968, with two consecutive days happending 125 times.
Three consecutive days of such divergence has happened only once in the last 43 years of the London Fix, back in May 2003.

"Bin Laden death saps 'safe haven' appeal from precious metals," claimed a headline at the Toronto Globe & Mail's site today.

"With many [Western] markets closed yesterday...the lack of liquidity exacerbated profit-taking [and] gold prices saw the biggest fall in seven weeks," says Marc Ground at Standard Bank in London.

But "The drop triggered a frenzy of gold buying in India," says Shivom Seth, writing for MineWeb, as "the world's largest consumer of the precious metal is set to celebrate Akshaya Tritiya on May 6th."

One of the Hindu Vedic calendar's holiest days, Akshaya Tritiya is widely celebrated across southern India, where "Buying small pieces of gold or believed to bring success and wealth."

Indian investors "were [also] betting on growing demand for the yellow metal," MineWeb quotes one Mumbai analyst, Omkar Agnihotri.

The US Dollar today extended Monday's rally, helping crude oil lose well over 1%.

The interest rate offered to investors by 12-month US Treasury bills fell to new record lows as debt prices rose.

From last Thursday's London Fixes – the final wholesale "benchmarking" before the UK's four-day Bank Holiday weekend – the price of gold today rose 0.7%, adding a little over $10 per ounce to a new record high of $1546.60.

Silver, in contrast, stood 10.5% lower on Tuesday morning, down more than $5 per ounce to a two-week low of $43.61, ahead of the sharply higher margin payments required of leveraged players by the US Comex exchange from today.

Raised for the third time in 1 week to $16,200, the margin requirement on 5,000-ounce silver futures has almost quadrupled from this time a year ago.

"The underlying facts supporting gold are still intact," says Philip Futures analyst Ong Yi Ling in Singapore, "such as the ultra-loose monetary policy of the US Federal Reserve."

"The normal negative correlation of gold vs. the Dollar is back...helping this overall firmer trend," notes Phil Smith in Beijing for Reuters Technical.

"Interesting to see how turnover [in gold futures] is coming down...A rising market with falling volume is generally not a good signal."

"During the last Federal shutdown, between Nov '95 and Jan '96," notes the commodities team at French investment bank and London bullion dealer Natixis – just as the US Treasury the Treasury said its agreed debt ceiling won't be reached until Aug. 3rd – "the price of gold rallied 8%.

"With the Dollar's effective exchange rate currently standing at its weakest level since at least 1990 amid concerns over US monetary and fiscal conditions, it is no surprise that gold prices are pushing up to new highs."

Speaking to the European parliament in Brussels on Monday, "The economic consequences of high-level indebtedness now would become more severe if rates were to rise," said UK central bank chief Mervyn King.

"It is the main reason why interest rates are so low."

Monday's spike in wholesale gold bullion prices at the start of Asian trade saw the metal touch new record highs for US, British and Canadian investors, plus a new 2011 high for both Eurozone and Swiss investors looking to buy gold.

Silver fell hard at the very same moment, however, losing almost 9% of its Dollar-price inside an hour of Asian traders getting chance to respond to last Thursday's Comex margin decision.

By Adrian Ash

Gold price chart, no delay   |   Buy gold online at live prices

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 , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2011

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 - 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