Best of the Week
Most Popular
1.Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - Harry_Dent
2. Is This How World War III Begins, In Almost Complete Silence? - Jeff_Berwick
3.Trump Wins 2nd Presidential Debate, Betfair Betting Markets Odds Bounce - Nadeem_Walayat
4.Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - GoldCore
5.End of SPX Stock Market Correction Nears - Tony_Caldaro
6.Get Ready for the Future - Exponential Machine Intelligence Mega-trend towards Singularity - Nadeem_Walayat
7.US Housing Market Bubble II – It’s Happening Again! - Andy_Sutton
8.FTSE BrExit Stock Market Panic Crash Resolves towards New All Time Highs - Nadeem_Walayat
9.Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - Nadeem_Walayat
10.Gold’s, Miners’ Stops Run - Zeal_LLC
Last 7 days
Where Will Crude Oil Price Head Next? - 25th Oct 16
Diamonds in the Gold and Silver Mining Stocks - 25th Oct 16
Trump’s Gettysburg Address against the New World - 25th Oct 16
This Past Week in Gold - 24th Oct 16
Can Gold Continue To Rise, Since The Usd Is Moving Higher Too? - 24th Oct 16
Why are Americans Avoiding the Stock Markets; Fear or Lack of Money? - 24th Oct 16
The US Is NOT a Low-Tax Jurisdiction - 24th Oct 16
Stocks, Crude Oil and EURUSD Trend Forecasts - 24th Oct 16
Stock Market Another Month to Go? - 24th Oct 16
Large Sell-off in Stock Market Looming - 24th Oct 16
Ungovernability - 24th Oct 16
Stock Market Boredom Before The Storm - 24th Oct 16
Establishment Mainstream Media Elite Buys US Election for Hillary Clinton, Time Running Out for Trump - 23rd Oct 16
Inflation About To Explode Higher - 22nd Oct 16
Still waiting for SPX uptrend to kick off - 22nd Oct 16
Will a Rising US Dollar Crush Gold’s Fledgling Bull? - 22nd Oct 16
Why The Global Economy Will Disintegrate Rapidly Back to Olduvai Gorge - 22nd Oct 16
GLD Bleeds Out; Weekly Gold Update - 22nd Oct 16
Stock Market Investment Success Through the “Investment Rule of 72” - 21st Oct 16
The Final Bottom in Gold - WHEN - 21st Oct 16
Gold Green Lights Upleg - 21st Oct 16
Demand for US Mints Silver Eagles has ‘Returned with a Vengeance’ - 21st Oct 16
Central Bankers Can't Stop The Death Blow Of The Post US Election Recession - 21st Oct 16
The Fortune at the Bottom of the Pyramid: Golden Opportunity for Frontier Asia - 21st Oct 16
Have You Taken These 4 Simple Steps to Improve Your Trading? - 21st Oct 16
The Stock Market is an Accident Waiting to Happen - 20th Oct 16
It's Rally Time for Gold and Silver Equities - 20th Oct 16
Cashless Society – Risks Posed By The War On Cash - 20th Oct 16
China's insane Housing Market Will Tumble and Crash in 2017 - 20th Oct 16
Donald Trump Bounces Going into 3rd and Final US Presidential Election Debate - 20th Oct 16
Attention Please: Phase Two of the Gold and Silver Train Now leaving the Station. All Aboard? - 19th Oct 16
How to Successfully Trade a Stock Market Crash - Black Monday October 19th 1987 - 19th Oct 16
Tesla, Apple and Uber Push Lithium Prices Even Higher - 18th Oct 16
Silver, Debt, and Deficits – From an Election Year Perspective - 18th Oct 16
UK Property Market: Slow Growth Does Not Equate To Decline - 18th Oct 16
Trump Election Victory is in Your Power - 18th Oct 16
Stock Market More to Come! - 18th Oct 16
This Past Week in Gold and Silver - 17th Oct 16
A Falling Stock Market Cannot Be Allowed - Financial Repression Is Now “In-Play”! - 17th Oct 16
Commodities, Forex and Stock Market Trend Forecasts - 17th Oct 16
Stock Market Crash..or No Crash? - 17th Oct 16
A perspective on risk rally – Risks abound but Stock Market is Confident - 17th Oct 16
Bank of England Blames Brexit for Sterling Drop Inflation, Masks QE Money Printing Cause - 17th Oct 16
From Piety to Pride to Pity, America's Racial Divide - 17th Oct 16
Is Obama Juicing US Government Spending To Get Hillary Clinton Elected? - 16th Oct 16
Seek Your Independence: Anything Else Will Destroy You - 16th Oct 16
SNL - US Presidential Debates, 1st, 2nd, VP - Like You've Never Seen them Before! - 16th Oct 16
End of Economic Growth Sparks Wide Discontent - 16th Oct 16

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

LEARN to Trade

Gold Being Liquidated for Cash as Stock Markets Fall Ahead of Fiscal Cliff Negotiations

Commodities / Gold and Silver 2012 Nov 16, 2012 - 07:23 AM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleWHOLESALE gold bullion prices fell below $1710 an ounce Friday morning in London, dropping below that level for the second day in a row, as stocks, commodities and the Euro all fell and US Treasuries gained ahead of negotiations among US lawmakers about the so-called fiscal cliff.

"Gold is being seen increasingly as a source of cash," says Simon Weeks, head of precious metals at bullion bank Scotia Mocatta.

"Liquidation of gold can cover losses elsewhere."

Silver bullion meantime fell to $32.19 an ounce.

On the currency markets, the US Dollar Index, which measures the Dollar's strength against other major currencies, touched a 10-week high as the Euro's recent rally stalled.

Heading into the weekend, gold bullion looked set for a 1.2% weekly loss by Friday lunchtime in London, while silver was down 1.3%.

President Obama is due to meet congressional leaders later today for negotiations on the so-called fiscal cliff due at the start of next year. Tax cuts made by former president George W Bush are due to expire on December 31, while spending cuts for the military and social programs are currently scheduled for January as a result of a deficit deal agreed last year.

Lawmakers are negotiating on how to reduce the federal deficit over the next deficit; failure to agree a deal would see the tax cut expiries and spending cuts occur as scheduled.

"[Obama] will not sign, under any circumstances, an extension of tax cuts for the top 2% of American earners," White House spokesman Jay Carney said Thursday, a day after President Obama suggested taxes should be raised for the wealthy to reduce the deficit.

"What we won't do is raise tax rates," countered Republican Senate leader Mitch McConnell, who will be at today's talks.

Ratings agency Standard & Poor's stripped the US of its AAA credit rating in August 2011, after weeks of negotiations on raising the so-called 'debt ceiling' for federal debt.

"The [US credit] rating is in the hands of policymakers," says John Chambers, chairman of S&P's sovereign rating committee.

"If no budget deal is reached in the early part of next year and the debt trajectory just continues to rise," adds Bart Oosterveld at fellow ratings agency Moody's, "then we'd be looking at a downgrade of a notch to Aa1."

Aa1 is the second-highest Moody's rating after Aaa.

"If we don't see an agreement and there is a gridlock, it will burden the Dollar and benefit gold," reckons Dominic Schnider at UBS Wealth Management.

The UK government is unlikely to end its ownership of Royal Bank of Scotland and Lloyds "any time soon", according to a report published by parliament's Public Accounts Committee.

"The £66 billion cash spent purchasing shares in RBS and Lloyds may never be recovered," the report on the sale of Northern Rock says.

"The low level of competition [to buy Northern Rock assets] does not give us confidence that the taxpayer will make a profit on the sale of RBS or Lloyds... it seems inevitable that their 'temporary public ownership' will last for some time, if getting value for our investment remains the most important objective for government. "

By contrast, the US Treasury Department said earlier this year that it expects to make a $2 billion profit on the stakes it bought in US banks during the 2008 crisis.

The volume of gold bullion held to back shares in the SPDR Gold Trust (GLD), the world's largest gold ETF, rose to within 0.07% of its all-time high yesterday, rising to 1339.6 tonnes during Thursday's US trading.

Soros Fund Management increased its investment in the GLD by 49% to 1.32 million shares during the third quarter, according to the fund's 13F filing with Securities and Exchange Commission. Hedge fund Paulson & Co., the GLD's biggest investor, maintained its stake at 21.8 million shares.

In its quarterly Gold Demand Trends published yesterday, the World Gold Council notes that notes that gold investment through exchange traded funds was strong in Q3, in contrast with demand in many markets for gold coins and bars.

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 2012

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.

© 2005-2016 - 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

Catching a Falling Financial Knife