Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Investing "Hits Big Numbers" as Eurozone GDP Shrinks

Commodities / Gold & Silver 2009 Feb 13, 2009 - 08:57 AM GMT

By: Adrian_Ash

Commodities THE SPOT PRICE of gold slipped 1.9% from a fresh 7-month high for US investors early in London on Friday as world stock markets rallied.

The Gold Price also retreated from new all-time highs for British and Euro buyers – hit just after the end of New York trade yesterday – at £671 and €744 respectively.


Crude oil held near two-month lows at $34 per barrel.

Treasury bonds gave back this week's gains as the MSCI index of world equity prices bounced from their near-4% drop.

"We have run up too fast and too high and we should see a correction [in Gold] down to the $920 an ounce level," reckons Bernard Sin at MKS Finance in Geneva, speaking today to Bloomberg.

But "Make no mistake," says today's note from metals dealer Mitsui, looking at mutual fund investing into Gold Exchange Traded Funds – "These are big numbers.

"The SPDR Gold ETF added another 1.14 million ounces Thursday. In complete contrast, India has reported NO gold imports so far in February – hardly surprising with the Rupee price at an all time high.

"Given the spot market was capped at $950 whilst all this ETF buying was going through, it is clearly a strong technical resistance level. The support level is $930, and as soon as this investment flows slow down, expect this to be tested."

Also watching the Dollar-price only, a note from Barclays Capital on Thursday told clients that gold has "resumed its eight-year bull run", breaking through important resistance levels this week to target new highs at $1,180 an ounce.

For the predominantly industrial platinum-group metals however, "Weak global industrial production, slumping automotive demand and frail consumer markets will depress PGM in the medium to long term," says the latest Commodities Weekly from Walter de Wet's team at Standard Bank in London and Jo'berg.

"With the Gold:Silver Ratio on the increase again, silver could [also] decouple from gold and be at the mercy of gloomy economic conditions."

This week the gold:silver ratio rose above 70, jumping from last year's average of 58. But it remains less than half the record peak of the late 1930s – when one ounce of gold bought 153 ounces of silver.

Under the 19th century Gold Standard , bi-metallic currency systems using both gold and silver for coinage priced gold at an average of 16 times the value of silver.

Over on the currency markets Friday morning, the Euro resumed its downtrend vs. the Dollar – falling to $1.2850 – on news that GDP in the 16-nation Eurozone shrank at a record rate at the end of 2008, contracting by almost 5% annualized. The German economy shrank at its fastest pace since 1988.

The British Pound shot higher, meantime, regaining half of this week's 8¢ loss.

Thursday saw both the Pound and Dollar tumble after Moody's Investor Services said the triple-A credit ratings of both the US and Britain were "being tested" by the financial crisis.

"However, in our opinion, these countries display an adequate reaction capacity to rise to the challenge," added Pierre Cailleteau, Moody's chief international economist.

Refining its view, Moody's also said the Anglo-Saxon states look "resilient" as opposed to "resistant" – a category reserved for stronger sovereign borrowers including Germany, France and Canada.

Ireland and Spain both look "vulnerable".

"I think the only way the United States will not default physically on their debt is to inflate," said Dr.Marc Faber – private-client fund manager and publisher of the Gloom, Boom & Doom Report – to CNBC earlier this week, "and in the long run you will get much higher inflation rates.

"In the US we have a totally new school of economic thought," Faber went on, "and it's called the Zimbabwe School of Economics.

"If something goes wrong, print. If it doesn't get fixed, print more. If it then goes even worse, print more."

Admitting that the US is "not yet" suffering hyper-inflation, "I don't see the Federal Reserve raising interest rates to real levels [above inflation in the cost of living]," he added, "or raising short-term rates above the level of GDP growth."

This week alone the US Treasury planned to sell $187 billion worth of new government debt, most of it as shorter-term notes and bills.

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 2009

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