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
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
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

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Gold Rallies as Dollar and Yen Correct

Commodities / Gold & Silver Oct 28, 2008 - 12:48 PM GMT

By: Adrian_Ash

Commodities THE PRICE OF GOLD BULLION continued to rally on Tuesday, rising to a four-session high above $752 per ounce as world stock markets also bounced after falling 12 times in 19 days in October.


Government bonds fell fast as money moved back into equities, pushing the yield offered by 10-year US Treasuries ten basis-points higher to 3.79%.

Consumer-price inflation in the United States was last pegged at 4.9% annually.

US crude oil futures also turned higher early Tuesday, bouncing 2.4% from yesterday's 15-month low to $64.75 per barrel. Food stuffs and base metals jumped alongside, led by an 11% gain in nickel.

Both the Strong US Dollar and Japanese Yen meantime slipped back on the currency markets, dropping 1.5% and 3.5% respectively vs. the Euro.

"Today is Diwali , the Indian festival of lights," notes the London team at precious-metals dealer Mitsui, "and leading up to this festival, physical gold demand in India is quite strong.

"The difference this year is that this time there has been reports of strong demand across the globe, and given this insatiable appetite for Gold , it's no wonder prices have recovered to the $750 area.

"Expect this demand to slow if Gold approaches $800 per troy ounce," advises Mitsui, but "with another round of interest rate decisions in the US later this week, gold could find fresh legs to travel higher."

The Fed's dramatic rate cuts starting in Sept. '07 saw the Gold Price leap from $650 an ounce above $1,030 by mid-March.

Today the Central Bank of Iceland hiked its key lending rate from 12% to 18% in a bid to stall the collapse of its currency – now worth two-fifths less on the forex market than at the start of '08 – as part of the measures demanded by the International Monetary Fund (IMF).

With a total of $200 billion in reserves, the IMF has now committed one-quarter to aiding Iceland, Ukraine, Pakistan, Hungary, Belarus and Serbia.

"When you tot up the countries across the [East European & Baltic] region with external funding needs," says Neil Schering, an emerging markets strategist at Capital Economics in London, "you get to $500bn or $600bn very quickly – and that blows the IMF out of the water.

"The Fund may soon have to start calling on the West for additional funds."

This morning the Bank of England said it believes the total losses to private banks as a result of the global solvency crisis could total $2.8 trillion total losses.

The IMF forecast $945 billion this spring. Ben Bernanke – chairman of the US Federal Reserve – began the bidding in July last year at $100 billion.

"Intervention is needed in the Japanese Yen," says Steven Barrow at Standard Bank here in London, "not because it might help stabilize Japan's stock market, or because it might stem the plunge in its trade balance.

"Instead, Yen Intervention is needed in order to slow down the global de-leveraging and mass position-unwinding that's going on right now."

Global credit markets remain closed to Latin American infrastructure projects, reports Latin Finance , with Barclays Capital advising clients that while individuals countries may remain strong, "evaluating vulnerability a complicated task."

Yesterday the government of Austria was forced to cancel a new auction of sovereign bonds due to lack of demand – the third such delay to hit European states so far this month.

New finance has also dried up for mining companies worldwide, reports Martin Creamer in his Mining Weekly , knocking London's largest mineral groups 44% lower on the stock market since end-June.

Most telling for future Gold Mining Output , the top 20 junior mining stocks listed on London's Alternative Investment Market (AIM) dropped more than 50% of their value between July and Oct.

No fresh funds were raised by new issues of AIM mining shares, and secondary issues raised just £6.1 million ($9.5m) in September.

"In just three months, the value of Aim's mining universe has more than halved," notes Dr.Tim Williams, director of mining-and-metals analysis at Ernst & Young. "Access to new capital for those without great projects, is, at least for the time being, closed."

For many junior exploration firms, Dr.Williams says, the situation is now "nearing critical".

Last night the head of South Africa's Harmony Gold – the world's fifth largest gold miner by ounces – said he's no longer looking to expand via early-stage projects, but rather through buying already-productive mines.

"Probably 12 months ago we were looking at exploration properties and early projects," said the CEO, Graham Briggs, to MiningMX.com . "Now we're looking more towards the production side of things."

Gold Mining production worldwide fell 6% during the first-half of the year compared with H1 2007, the World Gold Council said Monday.

Totaling just 590 tonnes between April and July, global gold mining output was the lowest since 1996 according to data from the US Geological Survey.

The Spot Gold Price in US Dollars has more than doubled since world gold mining production peaked in 2003.

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