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
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Demand Strong on Dips as Confidence in Currencies Goes Down the Drain 40 Years After Gold Standard's End

Commodities / Gold and Silver 2011 Aug 15, 2011 - 07:55 AM GMT

By: Adrian_Ash

Commodities

WHOLESALE PRICES to buy gold held above $1730 in London trade Monday morning – the 40th anniversary of US president Richard Nixon "closing the gold window" and officially ending the $35-per-ounce Gold Exchange Standard.

Trading nearly 4.7% below last week's new all-time high of $1815, the price to buy gold stood 50 times higher from the official US Dollar exchange rate of 15 August 1971.


Crude oil has risen nearly 24 times over since then, while US consumer prices (on the official measure) have risen 5-fold.

The S&P 500 stock market index has risen a little over 12-fold since August 1971.

"The metals had a fairly tamed start to the week," says a note from Mitsui's Hong Kong office on the $20-per-ounce overnight fall in the gold price.

"That provided a good opportunity to Chinese [traders], who bought either to establish long positions or to sell against Shanghai [as it] showed high premium."

Prices to buy gold on the Tokyo wholesale market also rose versus the London benchmark, cutting their discount to 75c per ounce as prices fell – the lowest since Dec. 2010 according to Reuters.

"We haven't seen much scrap and...are getting good physical demand from Indonesia and Thailand," it quotes a Singapore dealer today.

Anecdotal reports quoted by the newswire on Friday claimed that scrap gold supplies – sales by the general public of unwanted or broken jewelry – have been drying up in New York, Mexico City and Chennai, India despite this month's 11% jump in the gold price.

"While there are decent amounts of scrap gold coming to market from Asia, this is being outweighed by physical buying," says today's note from Standard Bank in London.

"Buying should increase on price pull-backs as we head into high seasonal demand" from Indian households ahead of the Diwali festival in late October.

Tokyo and other Asian stock markets meantime rose sharply this morning after new data showed Japan's economy shrinking less quickly than analysts forecast after March's tsunami and nuclear crisis.

European stock markets also rose, extending their two-day rally from the summer's 25% plunge in French and German equities.

"There won't be a collectivization of debt or unlimited assistance," said German finance minister Wolfgang Schäuble in today's edition of Der Spiegel, denying the joint-government bond solution to the Euro debt crisis set for discussion this week by Chancellor Angela Merkel and her French counterpart, Nicolas Sarkozy.

"Eurobonds would mean that everybody shares the same interest burden which would be a punishment for [fiscally] prudent nations," added Berlion's economic minister Philipp Roesler today, quoted by the DAPD news agency.

"Confidence in our currencies, policy makers and central banks is going down the drain," says Swiss asset manager Felix Zulauf in the latest edition of Barron's magazine.

"That will be reflected in a rising gold price.

"I have long said this isn't an environment for investing in stocks. Hold cash in the form of short- to medium-term Treasuries. Own a lot of gold, and don't have debt."

Desperate to suppress the surging Swiss Franc against the Euro, the Swiss National Bank injected cash equal to 20% of the country's annual economic output into the banking sector last week, reports the Financial Times' Gillian Tett today.

As a result, "Implied Swiss interest rates plunged into negative territory," Tett writes. "If you want to lend Swiss Francs or make a deposit in the next year, you must pay for the privilege.

"Call it Alice in Wonderland economics."

Analysts meantime continued on Monday to guess at the size of last week's intervention by the European Central Bank in the Italian and Spanish bond markets, with Gary Jenkins of Evolution Securities pegging the ECB's bond buying between €10 billion and €15bn.

"Spain and Italy between them are expected to come to the market for over €100bn of medium to long term funding for the rest of this year," Jenkins adds in a note, "which could mean official support for the markets may have to be substantial."

By Adrian Ash
BullionVault.com

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 www.BullionVault.com , 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.


© 2005-2022 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