Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Election Year Cycles – What to Expect? - 4th Jun 20
Why Solar Stocks Are Rallying Against All Odds - 4th Jun 20
East Asia Will Be a Post-Pandemic Success - 4th Jun 20
Comparing Bitcoin to Other Market Sectors – Risk vs. Value - 4th Jun 20
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20

Market Oracle FREE Newsletter


Gold and Stocks Rally as Hong Kong Housewives Queuing Up to Buy Gold

Commodities / Gold and Silver 2011 Sep 27, 2011 - 07:19 AM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleU.S. DOLLAR prices to buy gold rose to $1676 an ounce Tuesday morning London time – a 9% gain on yesterday's spot market low – as stocks and commodities also rallied and government bonds fell as reports circulated that European officials were drawing up new plans to battle the ongoing debt crisis.

The price to buy gold has now recovered all of yesterday's losses.

"Housewives are queuing up outside jewelry shops to buy gold after the dip," says one gold bullion dealer in Hong Kong, citing local press reports.

"At the current level people are buying," confirms another Hong Kong dealer, Ronald Leung at Lee Cheong Gold Dealers.

"They believed what happened in the past few days was only a correction."

"We continue to believe that gold will push higher into 2012," says Walter de Wet, commodities strategist at Standard Bank.

"However, until short-term funding, especially in Europe has been resolved, we remain neutral on gold."

Silver prices climbed to $33.54 per ounce – 28.2% up on Monday's low.

Overnight deposits made by Eurozone banks with the European Central Bank – rather than with each other – rose to a two-week high of €165.12 billion yesterday, a 9.6% jump from Friday's figure. Overnight ECB deposits hit their 2011 peak on September 12 at €197.75 billion.

Eurozone policymakers are currently devising a plan aimed at providing assistance to distressed European banks, according to a report published by financial news outlet CNBC on Monday.

Stock markets surged Tuesday morning – with the FTSE up 3% and Germany's DAX up 4.4% by lunchtime – in what CNBC's Jim Cramer hailed the 'No More Lehmans' rally, in reference to the plan.

The plan reportedly involves the European Financial Stability Facility – the Eurozone's €440 billion ad hoc bailout mechanism set up last year – as well as the European Central Bank and the European Investment Bank, which is owned by the 27 member states of the European Union.

The AAA-rated EIB, according to its website, exists to make "long-term finance available for sound investment" – including microfinance and loans to small businesses.

Under the new plan, the AAA rated EIB would set up special purpose vehicle capitalized by funds from the EFSF. This SPV would then issue bonds to private investors, using the money received to buy troubled sovereign debt. The SPV's bonds could also be used by the institutions that hold them – such as banks – as collateral against loans from the ECB.

The EIB "is certainly not a bailout-institution for the Eurozone," adds Jim Reid, head of global fundamental credit strategy at Deutsche Bank.

"[We understand the] EIB's charter currently does not allow sovereign or bank bond buying...changes to the EU Treaty with regards to the EIB's mandate would require a lengthy political process...[which] may involve all 27 EU member states rather than just the single-currency ones."

"Buying bonds," adds Standard Bank analyst Steve Barrow, "or recapitalizing banks works on the symptoms of the problem, not the causes...Eurozone growth will stay weak, leaving periphery countries like Italy and Spain fighting an uphill battle whether the EFSF can buy large amounts of their bonds or not."

Senior members of Germany's Free Democratic Party, the junior partner in the coalition government, said on Monday they would not vote for any plan that involves leveraging the EFSF – a suggestion made earlier this month by US Treasury secretary Timothy Geithner.

Over in Greece parliament is due to vote Tuesday on a new property tax aimed at cutting the country's deficit – while tax collectors are set to join a 48 hour strike in protest at the tax and other austerity measures. Greece is still awaiting confirmation that it will receive the next installment of its bailout funding – without which the government expects to run out of money within weeks.

Second hand home sales in Beijing meantime have fallen 73% in the last year, according to Chinese media reports.

Also in Beijing, Chinese consumers were given the chance to buy gold from the country's first gold vending machine over the weekend – although the machine was soon switched off again as it was not producing receipts.

China has been the world's fastest-growing source of private gold demand in recent years, and is currently the world's second-largest market behind India, according to World Gold Council figures.

By Ben Traynor

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

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(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.


Dr Ray
27 Sep 11, 16:12
China gold demand

The chinese property bubble is beginning to look fragile and when it bursts its going to take a lot of loose money out of the chinese economy. Since chinese are such big buyers of gold will this not reduce demand from retail investors rather than benefit from safe haven status as china takes the world down with it.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules