Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

© 2005-2019 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