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
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 and Silver Firm Despite Rising Dollar as Greek Debt Contagion Spreads

Commodities / Gold and Silver 2010 Apr 27, 2010 - 07:39 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD slipped below $1150 an ounce on Tuesday morning in London's wholesale market, dropping 0.3% from Monday's finish as the US Dollar rose and world stock markets fell once again.

"Contagion" fears over Greek government debt continued "spreading quite rapidly to Portugal, Spain, Ireland and Italy," said one credit strategist.


"This is a consolidation of Europe's walls, the walls of the Euro," complained Italy's foreign minister, Franco Frattini of Germany's stance.

"It's a rescue for all of us."

Gold priced in Euros held in a tight range around €27,800 per kilo – early April's then-record high, which was broken on Monday.

Two-year Greek bond yields rose to 14% this morning, pushing further above "high risk" government debt such as Pakistan's and offering well over 4.5 times' comparable German debt.

US, Japanese, German and UK government all bonds rose, in contrast, pushing 10-year yields down towards 1-month lows.

Asian stock markets fell for the third session in four. Crude oil dropped through $84 per barrel.

"With the financial terms currently on offer," reckons Citigroup's chief economist – former Bank of England policymaker Willem Buiter – a significant haircut for creditors or even a formal default become more likely."

Greek bondholders will likely be forced to accept much longer time-to-maturity, plus a 20% or "worst-case scenario" 30% drop in value, Buiter is quoted by Bloomberg.

"Greece is not an isolated case of budgetary indiscipline and deteriorating competitiveness," writes Standard Bank's chief currency strategist Steve Barrow today.

"Instead, there’s been a symmetric shock – the global credit crunch – which has hit budgets hard throughout the Eurozone...This is likely to drag down other Eurozone economies, other Eurozone bond markets, and the Euro."

"Precious metals are still clinging tenaciously to the heights they recently attained," writes Sean Corrigan at Diapason Commodities in Lausanne, Switzerland, "no more than buffeted, so far, by the stronger US Dollar."

Pointing to a marked deceleration in global money-supply growth – and noting the strong link between money growth and raw-material commodity prices – "All indications are that there is still some headroom in [the gold and silver] corner of the market," Corrigan writes, "especially since – for gold at least – extra liquidity inflates prices, while reduced liquidity enhances the insurance premium."

Gold prices trebled during the global "Reflation Rally" peaking in late 2007. They then rose by one-fifth against the Dollar as world stock markets dropped 60% of their value to March 2009.

"[European central banks] have little appetite for selling gold," notes marketing-group the World Gold Council in its latest central-bank gold reserve update.

Since 27th Sept. last year – when Western Europe's central banks renewed a 5-year deal to cap their joint gold sales, reducing the ceiling to 400 tonnes per year – total only 7.2 tonnes, the vast bulk of it from the International Monetary Fund.

"This leaves the IMF with 185.7 tonnes to be sold in a phased and transparent manner within the ceiling set by the CBGA," says the World Gold Council, "so as to avoid any disruption to the gold market."

Meantime on Tuesday, the British Pound fell sharply against the Dollar as UK mortgage approvals and wholesale trading activity both came in much weaker than expected in new data releases.

London's FTSE100 share index followed a 1.5% drop in mainland European stocks. Gold priced in Sterling recorded its best London Fix in two weeks above £750 an ounce.

Over in the US – where the Federal Reserve began its two-day monetary policy meeting – "The 'extended period' language about rates is likely to stay until later this year," reckons Swiss Re's chief economist Kurt Karl in New York, speaking to Money magazine.

"We're waiting for them to talk about the recovery being self-sustaining," agrees another chief economist, also speaking to Money magazine.

Last month saw Kansas City Fed president Thomas Hoenig vote against keeping the "extended period" phrase for a second time, warning other policy-makers that such language risks "the buildup of financial imbalances" by encouraging the idea that low rates will support asset prices indefinitely.

Hoenig supported keeping short-term Dollar rates at zero, however. Consumer-price inflation in the United States was last pegged at 2.3% per year.

Kind regards,

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly 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 2010

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.


© 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