Best of the Week
Most Popular
1.BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - Nadeem_Walayat
7.Gold And Silver – Insanity Is World “Norm.” Keep Stacking! - Michael_Noonan
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.Gold And Silver: Security, And BREXIT - Michael_Noonan
10.BrExit Vote - "The Trend is Set" -- And What You Should Pay Attention to Next - EWI
Free Silver
Last 7 days
Stock Market Bounce May be Over - 28th June 16
Stock Market Meltdown Likely to Drive Gold Towards $1,500 - 28th June 16
Brexit Victory over the EU Globalists - 28th June 16
Brexit Psyop: Greenspan Falsely Blames the Brits for the Crash and Chaos to Follow - 28th June 16
Greenspan Calls Brexit a ‘Terrible Outcome’ as Euro Area Tested - 27th June 16
Stock Market SPX Below Mid-Cycle Support - 27th June 16
Best Holidays for Summer 2016 - 27th June 16
Another Stocks Bear Market? - 27th June 16
BBC EU Referendum Result Highlights - YouGov, Markets, Bookmakers, Pollsters ALL WRONG! - 26th June 16
Investors Map Post-Brexit Strategies Amid Global Market Upheaval - 26th June 16
Gold Price Weekly COT Update - 26th June 16
First the UK, then Scotland ... then Texas? - 26th June 16
Stocks Bear Market Resumes or Just More Noise - 26th June 16
Gold And Silver: Security, And BREXIT - 25th June 16
Dow, Euro & Brexit Recap - 25th June 16
Resistance Holding Gold Stocks after Brexit - 25th June 16
Venezuela vs. Ecuador (Chavismo vs. Chavismo Dollarized) - 25th June 16
Gold, Silver And PM Stocks Summer Doldrums Risk - 24th June 16
Here’s Why China “Economic Hard-Landing” Worries Are Overblown - 24th June 16
Jubilee Jolt: Markets Crash, Gold Skyrockets as Britain Takes Brexit - 24th June 16
BrExit Morning - New Dawn for Britain, Independence Day! - 24th June 16
LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - 24th June 16
Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - 24th June 16
EU Referendum Shock Results Putting BrExit LEAVE in the Lead Hitting Sterling Hard - 24th June 16
Final Opinion Poll Gives REMAIN 52% Lead, Bookmakers, Markets and Pollsters ALL Back REMAIN Win - 23rd June 16
Does BREXIT Matter? Outlook for Sterling - 23rd June 16
Keep Calm and Vote BrExit - Last Chance to Break Free of EU Superstate - 23rd June 16
Here’s the Foreign Policy Trump and Clinton Really Want - 23rd June 16
Details Behind Semiconductor Stocks Leadership - 23rd June 16
Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - 23rd June 16
BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - 22nd June 16
Proof that the Gold Bears are Wrong - 22nd June 16
Here’s a Trillion-Dollar Investment Opportunity for Those Few with No Debt - 22nd June 16
BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - 22nd June 16
Increase In U.S. Rig Count Will Not Cap Oil Prices - 22nd June 16
Are Copper and China Stocks Set to Rally? - 22nd June 16
SPX May Break Its Trendline - 22nd June 16
Believe it or Not: More Kids Live At Home Now than Since The Great Depression - 21st June 16
EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - 21st June 16
British Pound Outlook - BREXIT, Europe and You - Does your vote matter? - 21st June 16
Fascist Victory Behind the European Union - 21st June 16
EU Referendum Opinion Polls Analysis Shows Strong Momentum in REMAINs Favour - 21st June 16
Is It Time to Dump Gold and Buy Platinum? - 21st June 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Market Volaility

Gold Up as the $500 Trillion Derivatives Time Bomb Keeps Ticking

Commodities / Gold & Silver Mar 12, 2008 - 11:01 AM GMT

By: Mark_OByrne

Commodities Best Financial Markets Analysis ArticleGold was up $4.10 to $974.30 per ounce in trading in New York yesterday silver was down 3 cents to $19.64 per ounce. In Asian and early European trading gold has traded sideways to slightly up. The London AM Gold Fix at 1030 GMT this morning was at $975.75, £483.26 and €630.90 (from $980.50, £485.47 and €633.40 yesterday).

Gold may continue to consolidate prior to the much anticipated rally to the $1,000 mark. But given the continuing weakness in the dollar (se FX below), record high oil prices and the continuing credit crisis, gold will likely continue to surprise to the upside.


Stock markets have again greeted the latest Federal Reserve “throwing money at the problem” panacea with glee and rallied strongly. However, this latest bout of irrational exuberance will likely be short lived. This is a another mere band aid which will not mend or heal the  gaping wound that is the housing, banking and credit derivative crisis. Indeed it may worsen things in the long term by making U.S. creditors increasingly unlikely to buy assets, including US Treasury's, denominated in the much printed dollar.

Support and Resistance
Gold's support is now at $960 and below that at $950. Resistance is at the recent high at $987.15.

12-Mar-08
Last
1 Month
YTD
1 Year
5 Year
Gold $   975.65
7.59%
17.08%
50.33%
181.89%
Silver     19.75
14.96%
33.71%
52.15%
328.41%
Oil   108.49
17.26%
9.39%
83.10%
186.78%
FTSE     5,808
-1.38%
-9.74%
-6.82%
76.70%
Nikkei   12,861
-1.23%
-15.98%
-25.62%
61.91%
S&P 500     1,321
-2.09%
-10.06%
-6.11%
64.22%
ISEQ     6,264
-5.76%
-9.66%
-34.34%
67.07%
EUR/USD   1.5448
5.96%
5.91%
17.14%
40.64%
© 2008 GoldandSilverInvestments.com


FX Commentary
The Fed announcement yesterday did more for risk appetite than it did for the dollar itself. As a result as the Dow rallied and risk appetite in FX markets returned. The dollar rallied strongly against the Yen and against the Swiss Franc, however its effect on the Euro and Sterling was muted and appears to be short lived. The single currency had reached a new all time high against the Greenback (1.5496) and after falling back to the lows of the day post Fed announcement, it has again returned to the uptrend, trading just above 1.5400. With the Fed moving in to the “Landlord” business and the faltering economy and higher oil prices, next week's expected rate cut out of the States will help the Fed in further badly damaging the dollar and jeopardising the international monetary system.

As commodity prices consolidate and some areas of the market call an end to the “commodity bubble”, the commodity currencies are also consolidating at their higher levels. The Australian, New Zealand and Canadian dollars are taking a breather before resuming the inevitable uptrend as they follow the underlying commodity markets higher.

All eyes will be on Alastair Darling this afternoon as he presents his first, and possibly his last, UK budget. The FX markets will be no different and any criticism of what he presents will immediately be seen in the currency markets. This could be the fillip the Euro needs to return to the uptrend against the British Pound.

Federal Reserve ‘Pushing on a String'
The Fed's latest intervention is moral hazard writ large. In effect the Federal Reserve is bailing out irresponsible hedge funds and banks at the expense of U.S. citizens and the U.S. dollar. It increasingly looks like the free market is being subverted and a new form of financial socialism is afoot. As seen with Northern Rock in the UK, the end game is likely to be bankruptcy or nationalisation for some of the banks. The Federal Reserve is pushing on a string and these interventions are very unlikely to alleviate the liquidity, solvency and systemic problems that elements of ‘casino capitalism' Wall Street has created for itself.

Reuters recently reported the US housing market "is in the worst downturn since the Great Depression of the 1930s". Unfortunately there is no simple cure for the bursting of a massive housing bubble and as no amount of palliatives can rectify the credit crisis and the coming serious recession.

The Austrian School of Economics is instructive in this regard. Von Mises sums it up very well when describing the "crack-up boom".

“The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The boom comes to an end as soon as additional quantities of fiduciary media are no longer thrown upon the loan market. But it could not last forever even if inflation and credit expansion were to go on endlessly. It would then encounter the barriers which prevent the boundless expansion of circulation credit. It would lead to the crack-up boom and the breakdown of the whole monetary system.

The credit expansion boom is built on the sands of banknotes and deposits. It must collapse. If the credit expansion is not stopped in time, the boom turns into the crack-up boom; the flight into real values begins, and the whole monetary system founders. Continuous inflation (credit expansion) must finally end in the crack-up boom and the complete breakdown of the currency system."

http://www.shadowstats.com/imgs/sgs-m3.gif


$516 Trillion ‘Ticking Bomb'
Paul Farrell in Marketwatch writes in an excellent article ‘Derivatives the new 'ticking bomb'' that both Warren Buffett and Bill Gross have warned that the $516 Trillion derivative bubble is a disaster waiting to happen. ( http://www.marketwatch.com & http://www.bis.org)

Unlike the many US dollar denominated paper instruments that have been created in an unprecedented fashion in recent years and continue to be – gold is finite.

Gold bears the confidence of the world's millions particularly in the non western world, who value it's intrinsic value far above the promises of politicians and bankers and far above the unbacked paper issued by governments as money equivalents. This has been the case throughout our history and will remain so in the future. Especially in a world of unprecedented and massive credit and money creation and $516 trillion worth of opaque and exotic derivatives that exist in our new shadow banking system.

Silver

Silver is trading at $19.74/19.78 at 1030GMT.

PGMs

Platinum is trading at $2042/2052 (1030GMT).
Palladium is trading at $484/490 per ounce (1030GMT). 

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold Investments
Tower 42, Level 7
25 Old Broad Street
London
EC2N 1HN
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

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: 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. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

© 2005-2016 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

Catching a Falling Financial Knife