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
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
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19
Where is the Top for Natural Gas? - 7th Nov 19
Why Fractional Shares Don’t Make Sense - 7th Nov 19
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think - 7th Nov 19
China’s path from World’s Factory to World Market - 7th Nov 19
Where Is That Confounded Recession? - 7th Nov 19
FREE eBook - The Investment Strategy that could change your future - 7th Nov 19
Is There a Stock Market Breakout Ahead? - 6th Nov 19
These Indicators Aren’t Putting to an Economic Resurgence - 6th Nov 19
Understanding the Different Types of Travel Insurance - 6th Nov 19
The Biggest Gold Story Of 2020 - 6th Nov 19
Best Money Saving FREE Bonfire Night Fire Works Show Sheffield 2019 - 5th Nov 19
Is the Run on the US Dollar Due to Panic or Greed? - 5th Nov 19
Reasons Why Madrid Attracts Young Professionals - 5th Nov 19
Larger Bullish Move in USD/JPY May Just Be Getting Started - 5th Nov 19
Constructive Action in Gold & Silver Stocks - 5th Nov 19
The Boring Industry That Hands +500% Gains - 5th Nov 19
Stock Market Chartology vs Fundamentals - 4th Nov 19
The Fed’s Policy Is Like Swatting Flies with Nuclear Weapons - 4th Nov 19
Stock Market Warning: US Credit Delinquencies To Skyrocket In Q4 - 4th Nov 19
Stock Market Intermediate Topping Process Continues - 4th Nov 19
Stock Market $SPY Expanded Flat, Déjà Vu All Over Again - 4th Nov 19
How To Buy Gold For $3 An Ounce - 4th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Gold Collapses as Speculators Panic

Commodities / Gold & Silver Aug 15, 2008 - 05:05 AM GMT

By: Adrian_Ash

Commodities

THE SPOT PRICE OF GOLD sank yet again at the London opening on Friday, falling 2.6% to touch a nine-month low as US crude oil prices dropped 1.3% to trade below $114 per barrel.

Western European stock prices rose meantime in early trade, averaging 0.8% gains despite this week's clear signals of economic recession ahead.


Versus the almighty US Dollar, the British Pound slumped 0.8% to its lowest level since July 2007. The European single currency fell to a fresh five-month low beneath $1.4700.

"More gains in the greenback should expose crude oil prices to further downside potential," writes Manqoba Madinane in today's Gold Market note for Standard Bank in Johannesburg , South Africa .

"This could keep precious metal investment demand at bay today."

US Treasury bonds continued to rise alongside the Dollar in Asian trade on Friday, nearing their third weekly gain on the trot despite yesterday's shock jump in America 's official Consumer Price Index.

Even after stripping out so-called "volatile" yet essential energy and food products, the cost of living is now rising 0.5% per year ahead of the Federal Reserve's key interest rate.

After allowing for inflation in eating, heating and transport, real US interest rates now stand at minus 3.6%, but with real estate prices continuing to plunge the futures market expects "no change" from the Fed until December or beyond.

Today the Wall Street Journal reports a survey of 53 professional economists, 3-in-5 of whom think the US government will have to save top mortgage lenders Fannie Mae and Freddie Mac with a cash bail out, further extending Washington 's fiscal debt – pegged at near-record growth of $107 billion last month alone.

"Excess liquidity is what got us into this situation in the first place," notes Joe Foster, gold strategist and co-manager of the $13 billion Van Eck investment funds.

"The loans and liquidity the US government provided hasn't cured the situation. We have to clear all the bad debts and silly spending. No amount of government spending can hurry that process or help alleviate that."

Today, however, Goldman Sachs slashed its three-month target for Gold Prices from $890 per ounce to $745 – right where the uptrend starting in late summer 2005 now sits and precisely 25% below gold's all-time record top of $1,032 set back in mid-March.

"The region around $750 is very important," said Adrian Koh, an analyst in Singapore with Phillip Futures, to Reuters earlier, "because this is a long-term gold uptrend support."

"It's still early to say it's the end of the super-cycle but if the markets continue to fall like they are doing now, I am sure many people will be talking about it very soon."

The previous "blow-off top" in Gold saw the metal drop 25% of its Dollar-value between May and June 2006. During the 1970s' bull market, the price of gold fell by one-half after rising six times over.

It then rose eight-fold between Sept. 1976 and Jan. 1980, peaking at $850 per ounce.

"Many of the shakier speculators and investors have probably baled out in the last few days," writes Wolfgang Wrzesniok-Rossbach in the latest Precious Metals Weekly for Heraeus, the German refining group.

"[They] will probably not be seen in the market for sometime to come."

On the upside, meantime, "physical demand is back again and this will most likely get stronger from Sept. onwards; the increase in net production, if any at all, is happening at a very slow pace and secondary supplies are reducing."

South Africa , the world's No.1 gold-mining nation throughout the 20th century, reported a 12.3% decline in gold output for June compared with the same month in 2007.

"Our colleagues from Hong Kong report that after the recent price drop, they have seen robust demand coming not only from the jewelry sector but also from other industrial end-users," Wrzesniok-Rossbach  goes on.

"As a result – after being net exporter from Hong Kong in the recent past mainly due to getting in masses of scrap gold – [Heraeus is] now back to being a net importer.

"Here in Europe , despite the cheaper prices industrial demand thanks to the summer holidays, demand has so far remained restrained. Investors in physical bars on the other hand have been active and have used the lower prices to build up stocks."

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.


Comments

Glenn
18 Oct 08, 12:45
GOLD to fall to $ 600.00 per ounce

after reading all the investor reports and speculators reports I see Gold at or below $ 600.00 per ounce by years end 2008. It should be a buyers market by end of Oct to mid DEC. BUY now and hold for big profits as prices raise high and fast buy the middle of 2009 as the regular people start to see the bailout is failing and start to see the so call end of time nearing as stated in the Bible where you can buy nothing! with out GOLD or SILVER or the mark of the beast most people buy the NGC or PCGS graded coins but in fact no matter how good the coin is rated it is worth only what gold sells for per ounce when melted so I suggest you buy only RAW coins or in bars 1 gram to 1 ounce at a time whatever you can afford. GOOD LUCK


Post Comment

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

6 Critical Money Making Rules