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
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Gold Surges as Governments Start Running Out of Ideas

Commodities / Gold & Silver Dec 15, 2008 - 10:49 AM GMT

By: Adrian_Ash

Commodities THE SPOT PRICE OF GOLD BULLION came within $1 of a new two-month high early Monday in London, holding onto last week's 9% jump and recording its best Morning Gold Fix since Oct. 16th for US investors.

Crude oil and the Tokyo Nikkei index both jumped more than 5%, but European stock markets gave back their opening gains by lunchtime.


German bund and UK gilt yields fell as prices rose on a raft of poor data.

The Gold Price in Sterling recorded its best-ever AM Fix at £551.23 an ounce.

"Precious metals are benefiting from the much weaker Dollar as we head into year-end," reckons Walter de Wet at Standard Bank in Johannesburg, but "volumes are low and prices volatile."

For gold investors, "Primary support is at $810, with secondary support at $800 and $777," he believes.

"Resistance is at $832, $841 and $862."

Monday morning saw the European single currency touch a two-month high near $1.3500, capping the Gold Price in Euros below €615 an ounce.

The Dollar bounced against the Japanese Yen, however, rising from a new 13-year low beneath ¥90 after Tokyo – still paying nothing to cash savers in a bid to revive its economy after two decades of stagnation – reported the sharpest collapse in manufacturing sentiment since the late 1970s.

China's industrial output growth slowed to 5.4% year-on-year in November, Beijing said this morning, the slowest rate in 9 years.

Twenty-six economists polled by Reuters averaged a forecast of 7.1% growth instead.

Looking ahead to Wednesday's interest-rate vote by the Federal Reserve in Washington, more than two-thirds of futures bets expects a 0.75% cut to rates of just 0.25%.

Data from the New York Federal Reserve, however, shows that in the Fed funds rate already stands below 0.15% in the open market as the central bank floods the system with money.

The Fed continues to refuse a Freedom of Information request by Bloomberg News asking it to name the recipients of over $2 trillion in emergency loans funded by US taxpayer.

A report in the Wall Street Journal said on Saturday that president-elect Barack Obama will spend $1 trillion on trying to stimulate the economy over his first two years in office.

"If it looks like Bernanke and Paulson are making all their policy moves on the fly," writes fund manager and accredited-investor advisor John Mauldin in his Thoughts from the Frontline , "it is because that is exactly what they are doing – as would any person in their respective offices.

"There is no playbook with a set of standard policies and procedures that can be used in case of a credit crisis."

Across the Atlantic in Europe this morning, world-leading banks including HSBC, Santander and BNP Paribas admitted to investing in the "Ponzi Scheme" hedge fund run by former Nasdaq chief Bernard Madoff.

Holding $17 billion in assets but already guessing losses to be "at least approximately $50bn", Madoff told an FBI agent last Thursday there was "no innocent explanation".

Now "broke...insolvent," his fund – popular with fund-of-hedge-fund clients – "paid investors with money that wasn't there," Madoff confessed.

"You still have a massive paranoia in the marketplace and you've got that safety-at-any-cost mentality," says Jay Mueller, manager of $3 billion in bonds at Wells Fargo in Milwaukee.

Pointing to the zero-to-negative returns offered by government bonds, "People are not buying Treasury bills because they think the yields are attractive," he added to Bloomberg. "They are buying them because they are afraid to put money anywhere else."

Despite the collapse of official US rates and government yields, however, the interest charged to corporate borrowers has leapt in the debt markets the newswire notes.

The yield premium for corporate borrowers has risen from 2.96% above Treasuries in January to 8.85% according to Merrill Lynch data.

"We have the Fed interest rate decision this week, which should be the last big event of the year," says Afshin Nabavi, chief precious metals trader at MKS Finance in Geneva, speaking to Reuters.

"Everyone is banking on a lower interest rate in the United States. If the Dollar continues to lose value, of course it will benefit Gold ."

Meantime in the Gold Mining sector today, Australia's official Bureau of Agricultural & Resource Economics forecast a 3% drop in global gold output for 2008, but pointed to a slight recovery for 2009.

Gold mine output peaked worldwide in 2003, back when the price of gold stood at one-half of today's levels against the major world currencies.

World No.1 Barrick Mining today resumed operations at its North Mara project in Tanzania following an attack by 200 or more local villagers – variously demanding gold, sand, better environmental standards or fewer beatings from the mine's security staff, depending on which press reports you read – closed the mine Friday.

Back in New York, meantime, latest data on US derivatives showed late Friday that the total number of contracts outstanding in Gold Futures and options has now shrunk by one-half from the record top of January.

Hedge funds and other "large speculators" have closed out nearly two-in-every-three positions from mid-March – back when the Dollar Gold Price topped $1,000 an ounce – as investment banks shut down their prime-brokerage lines of credit.

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