Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Investors Flock To Gold as Global Banking Crisis Worsens

Commodities / Gold & Silver Jan 14, 2008 - 10:26 AM GMT

By: Adrian_Ash

Commodities THE SPOT GOLD MARKET surged into the London opening once again on Monday, starting the week at a new record high of $914 per ounce and hitting record highs against all other major currencies, too.


"The fresh flows of investment into commodities are gaining pace as news on the US economy continues to worsen," says Mitsui, the metals dealer, in a note today.

"Our projection for gold (for there is little other technical analysis to look at) is $975, but with Gold Market volatilities increasing, the possibility of a significant pullback is growing."

US stock futures pointed higher as the Wall Street opening drew near, but the S&P 500 index has now fallen for three weeks running to lose 4.6% from New Year's Eve – "the worst start since 1982," according to Bloomberg.

Citigroup Inc. is rumored to face fresh losses of $24 billion on its mortgage-bond investments, and a report from CNBC also forecasts 24,000 lay-offs when the world's largest bank reports fourth-quarter results on Tuesday.

Today's Financial Times says Merrill Lynch – due to report on Thursday, and widely expected to write-down a further $10-20 billion in mortgage-bond losses – is now looking to raise $4bn in capital funds, with the state-owned Kuwait Investment Authority set to take a "significant" stake.

"The weak Dollar, the simmering pot called Iran, crude oil at $100 per barrel (and likely to rise much higher this year), a deadbeat US presidency, a probable US recession, collapsed credit, diabolical consumer confidence...Little wonder investment money is flocking to gold," says Jessica Cross of the Virtual Metals consultancy at MiningMX.com today.

"But the increase in speculative positions in gold futures – now at a net long of 1,600 tonnes – means a correction, when it happens, could be devastating," she adds. "Some of the big investment banks are already privately advising clients to get ready to sell at a moment's notice."

The "net long" position of speculative traders at the Comex in New York grew by 3% in the week to last Tuesday, says the latest official data, hitting a record 205,404 contracts. On the other side of the trade, however, betting on US interest-rate futures is now unanimous that the Federal Reserve will cut 0.5% off the cost of borrowing Dollars when it meets on Jan. 30th.

This time last week the futures market priced a 50-basis points cut at 66%.

"We can find higher and higher Gold Price targets depending on how gloomy we get on the macro-economic mix and the policy settings that are likely to follow," says Sean Corrigan, chief investment strategist at Diapason Commodities Management in Lucerne , Switzerland .

"On the way up in this latest leg there was good support at $850. Several times we tried to dip back towards it, but gold was immediately bought back, and that's given us the impetus for this round.

"The general trend here is the one we like. You're buying commodities as much for inflation protection as for growth [and] precious metals are the obvious outlet for this. We've got safe haven worries as well, and everything is coming together.

That said, "there is a huge speculative long in this position," says Corrigan, "so you've got to worry about a sudden lurch down before the next move higher."

Asian stock markets fell yet again this morning, closing the day 1.9% lower in Tokyo and losing 1.5% in Hong Kong . Gold futures traded at Japan 's Tocom exchange rose 1.6% to breach ¥3,100 per gram for the first time in 24 years.

On the currency markets the Euro broke through $1.4900 for the first time since last month, when the single currency made life-time record highs just shy of $1.5000. But today's move failed to cap the surging Gold Price in Euros , however, which shot 1.5% higher from its overnight low to hit new highs above €613 per ounce.

For British investors wanting to Buy Gold today, the metal gained more than 1.6% as London opened to reach £465.50 per ounce – nearly £30 higher per ounce from this time last week.

In the commodity markets today crude oil held flat after the Qatari energy minister said the Opec oil cartel – which accounts for more than 40% of the world's daily supply – "cannot control market forces."

"They can't control the geopolitics," said Abdullah al-Attiyah to reporters in Doha . "They can't control the speculation."

Copper prices rose in Shanghai to a two-month high on news that China 's copper imports grew by 8.6% last month from Dec. '06. Zinc and aluminum prices slipped, while soybean futures traded in Dalian , China , jumped to new all-time highs.

The new gold futures contracts being traded at the Shanghai Futures Exchange gained 0.5% for the session to equal $938 per ounce for June delivery.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2008

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.

Adrian Ash Archive

© 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