Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

New Record Gold Highs in USD, GBP and EUR on Moody’s Ireland Debt Downgrade

Commodities / Gold and Silver 2011 Jul 13, 2011 - 08:01 AM GMT

By: GoldCore

Commodities

Best Financial Markets Analysis ArticleGold is trading at $1,572.35/oz, €1,116.17/oz and £985.49/oz.

Gold for immediate delivery rose to new record nominal highs of 987.58 British pounds and 1575.18 U.S. dollars in London this morning. New record nominal highs were seen for gold in euros (1,123.50 euros per ounce), pounds and dollars yesterday.


Gold rose soon after FOMC minutes showed that the Federal Reserve is considering further quantitative easing or QE3 and after Moody’s downgraded Ireland’s debt to junk status. The very poor trade deficit numbers in the U.S. yesterday ($50.2 billion in May) and the UK this morning (£8.5 billion in May) is also supporting gold today.

Cross Currency Rates

The Moody’s downgrade of Ireland was expected but the timing was very bad given the increasing turmoil in Eurozone bond markets and deepening risk of contagion due to bond risk in Spain and Italy, the world’s third largest debtor after Japan and the U.S.

While Italian and Spanish bond yields have fallen today, the Irish 10 year yield rose to new euro era record highs at 13.74%.

While UK inflation figures yesterday were slightly better than expected, today’s unemployment figures were worse than expected. Jobless claims rose at their fastest pace since May 2009, showing the UK recovery is faltering and jobs are being lost as the deepest government budget cuts since World War II take hold.

XAU-GBP Exchange Rate

The FOMC’s hinting of further QE3 is of course gold bullish. Although, it is likely to be packaged with some new fangled meaningless acronym. The fragile nature of the U.S. recovery has long meant that the threat of quantitative easing, or money printing and debt monetization, coming to an end was unlikely.

While the Federal Reserve may be planning significant debt monetization in order to inflate away their massive debts ($14.495 trillion national debt and unfunded liabilities of between $60 trillion and $100 trillion) some of their larger creditors such as China and Russia have communicated to the Federal Reserve that the U.S. should not debase their dollar holdings.

Gold Spot $/oz

Russian Prime Minister Vladimir Putin said yesterday that the United States is acting like a hooligan. Putin lampooned the Federal Reserve's $600 billion bond-buying spree for flooding the world with cheap dollars.

"They turn on the printing presses and fling them (dollars) over the entire world to resolve their immediate tasks. They say monopolies are bad but only if they are foreign -- their own are good. So they use their monopoly on printing money to the full.”

Meanwhile, the increasingly powerful Chinese credit rating agency, Dagong has suggested that they will downgrade the U.S. regardless of whether the US Congress reaches an agreement on raising its statutory debt limit.

Guan Jianzhong, chairman and CEO of Dagong, said that the downgrading is really just "a matter of time and extent".

Gold’s record highs in major currencies is a sign that the risk of contagion in global financial markets is deepening.

A U.S. sovereign down grade could be the catalyst for contagion.

Contagion in bond markets, financial markets and banking systems would almost certainly lead to contagion in currency markets as fiat currencies are debased en masse in order to prevent a deflationary collapse.

XAU-EUR Exchange Rate

Governments internationally remain in denial about the scale of the crisis and the ramifications.

The ramifications are that some western countries are now facing the risk of an Argentina style economic meltdown.

Exaggerated threats of ATMs not functioning have been used by bankers to justify massive taxpayer bailouts of insolvent banks.

The unfortunate reality is that the massive bank bailouts now mean that cash not coming out of ATM machines may soon be the least of our worries.

Contagion and economic meltdown in western countries would involve runs on banks (insolvent banks backed or “guaranteed” by insolvent states), “bank holidays”, freezing of bank accounts and deposit withdrawal restrictions.

This was seen in Argentina in 2001. Capital controls and exchange controls would also be likely.

In such a scenario, keeping the majority of one’s wealth in savings or deposit accounts in banks or other institutions – whether that be pound, dollar, euro deposits (or deposits in another depreciating fiat currency such as the yen or Swiss franc) is not prudent.

Given the global and systemic nature of the crisis and the huge challenges facing the U.S., the UK, Eurozone countries and Japan – all banks internationally would be vulnerable.

National bankruptcies in western countries would also see insolvent governments unable to pay public sector wages (nurses, police, teachers etc ) or pay for public services. Pensions and social welfare payments could not be paid either.

Social unrest would inevitably ensue.

Gold is essential financial insurance and will protect people from these worst case scenarios – as it has done throughout history.

International equities and international bonds (high credit, low duration) will also offer protection. Provided they are owned in a liquid manner and are held with safe custodians and counterparties. Liquidity and counter party risk will be of paramount importance.

These real risks mean that continuing talk of gold being ‘risky’ and a ‘bubble’ remains uninformed. Some non gold experts have been saying this for more than 3 years - when gold ‘peaked’ at $850/oz in March, 2008.

Uninformed comment by vested interests and others who continue to not know their financial, economic and monetary history is unfortunate. It discourages people from protecting themselves and their families from the coming financial and economic difficulties.

We do not think an economic meltdown is inevitable. Indeed, there remain options which would greatly ameliorate this worse case scenario. However, as ever, it is important to acknowledge this risk and prepare ones finances by becoming properly diversified and owning gold.

Denial and false hope will ensure even greater financial and economic pain.

As ever it remains prudent to hope for the best but be prepared for less benign scenarios.

SILVER
Silver is trading at $36.63/oz, €26.00/oz and £22.96/oz.

PLATINUM GROUP METALS
Platinum is trading at $1,742.00/oz, palladium at $770/oz and rhodium at $1,925/oz.

GOLDNOMICS - CASH OR GOLD BULLION?



'GoldNomics' can be viewed by clicking on the image above or on our YouTube channel:
www.youtube.com/goldcorelimited

This update can be found on the GoldCore blog here.

Yours sincerely,
Mark O'Byrne
Exective Director

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore Archive

© 2005-2022 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