Gold Speculator - BullionVault http://www.gold-speculator.com/ Contributed commentary from BullionVault.com en Wed, 08 Sep 2010 01:56:21 GMT vBulletin 60 http://www.gold-speculator.com/images/misc/rss.jpg Gold Speculator - BullionVault http://www.gold-speculator.com/ How Much is Too Much for Gold-in-the-Ground? http://www.gold-speculator.com/bullionvault/37604-how-much-too-much-gold-ground.html Tue, 07 Sep 2010 23:38:55 GMT by Adrian Ash
BullionVault
Tuesday, 7 September 2010

This year's bumper gold-mining deals come as big discoveries have gone missing in gold...

WHATEVER'S LURKING in Andean Resource's data room – opened to suitors for two years, but now closed after GoldCorp trumped Eldorado's US$3.3bn bid – it must be pretty spectacular.

Because on published figures, and at current spot prices, GoldCorp's offer equals 74% of the gold and silver resources indicated and inferred at Cerro Negro. Based on viable reserves alone, the bid is priced at 1.5 times proven and probable ounces!

That suggests real confidence not only in the precious-metal bull market, but most spectacularly in Andean's exploration projects.

Southern Argentina certainly looks compared with the world's better-developed but fast-ailing gold mining sites. A marginal producer at the top of gold's last long-run bull market, South America has since overtaken Australia, North America and South Africa, and now spits out twice as much gold per year (according to GFMS's 2010 forecasts) as the world's single largest gold-mining nation, China. Extraction costs are also alluring, doubling since 2006 to around $350 per ounce (GFMS again) but undercutting North America's average cash costs by well over $100 and slashing South Africa's cost in half.

As for the timing, 2010 has already overtaken full-year 2008 with record spending on gold mining mergers and acquisition. The sector's third-largest corporate action takeover of the year to date, GoldCorp's agreed offer – which may still see revised bids from other suitors, according to the newswires – follows Newcrest's US$8.4bn acquisition of fellow Australian firm Lihir in May, and last month's $7bn purchase by Kinross of the 91% of Red Back Mining it didn't already own.

This size of takeover led the mining world table in 2008, when precious-metal producers didn't even figure in the top 10 deals, despite it being a bumper year for gold M&A. And as for last year, gold's biggest takeover in 2009 was for the $1.7bn purchase of Sino Gold by Eldorado – Andean's disappointed suitor today.

So what about price? Well, Newcrest's takeover of Lihir in May was priced at just 22% of proven and probable reserves, equal to 12% of indicated and inferred resources – a real bargain compared to Kinross's merger with Redback. Even with spot gold trading near all-time highs, that cost nearly 25% of potential resources, equal to fully 38% of proven and probable ounces. Little wonder perhaps that ISS on Friday called Kinross' bid too rich; J.P.Morgan says Redback would needs to near-double its resources to make the offer worthwhile.

But with gold mining firms bloated with cash and bleeding reserves as they continue to mine, could one-third (or so) of proven-and-probable ounces set a useful benchmark for acquisitive majors? Andean may be sitting on a further 4.2 million ounces of "potential" gold, reckons Credit Suisse's Michael Slifirski. In which case (and not forgetting South America's low extraction costs), GoldCorp's bid would fall to 35% of total resources at current prices.

Together with the Kinross-Redback deal (and only if both complete), that might suggest a base level for M&A pricing in a world losing 4 million ounces per year in new discoveries since 1980.

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 and now backed by the mining-sector's World Gold Council research body – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/37604-how-much-too-much-gold-ground.html <![CDATA[LGMR: Gold "Steals Silver's Limelight" at $20/Oz as Economic Uncertainty Boosts Gold]]> http://www.gold-speculator.com/bullionvault/37603-lgmr-gold-steals-silvers-limelight-20-oz-economic-uncertainty-boosts-gold.html Tue, 07 Sep 2010 23:26:31 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:30 ET, Tues 7 Sept

Gold "Steals Silver's Limelight" at $20/Oz as Economic Uncertainty Boost Precious Metals Investment

THE PRICE OF GOLD in wholesale dealing held in a tight range around last week's close as New York re-opened after the Labor Day holiday on Tuesday, trading at $1247 an ounce while European stock markets fell and government bonds rose.

Silver fell almost 2% from Monday's breach of $20 an ounce – a 30-month high previously hit in Nov. 1980.

"Each time a rise in gold hits the headlines, it steals the limelight from silver," says Ashraf Laidi at spread-betting firm CMC Markets, quoted today in the Financial Times.

"Silver has not only followed rallies in gold, but usually outperformed, as can be seen in a fall in the gold/silver ratio – the amount of gold that can be purchased with one ounce of silver."

Yesterday saw the gold/silver ratio fall towards a 12-month low beneath 63 on the London Fixes. Its four-decade average stands at 53 ounces of silver per ounce of gold.

The Euro meantime fell 1.5’ from 3-week highs to the Dollar early on Tuesday after the Wall Street Journal accused last month's "banking stress tests" of excluding "a significant amount" of government-bond exposure amid the recent Greek deficit crisis.

European finance ministers meeting in Brussels last night agreed "on the need for credible sanctions" against governments that breach the union's debt and deficit limits, EU commissioner Olli Rehn told reporters.

But easing tensions over Greece's deficit have led to "a slight slackening of the dynamism" to fix the system, Germany's Wolfgang Schδuble warned.

"Despite concerns over the global economy, precious metals have also come under attack," says Walter de Wet, chief commodities analyst at Standard Bank, this morning.

"[But] while precious metals might be on the back foot for now, lingering uncertainty means the outlook for these metals still looks promising."

"Even though there's some liquidation in the gold ETF, everybody is still bullish," Reuters quotes Ronald Leung of Lee Cheong Gold Dealers in Hong Kong, after New York's SPDR Gold Trust reported a 0.4% drop in its physical holdings.

"There's so much uncertainty in the economy and the [Hindu] festive season is on and we expect to see buying at the lower end.

"I think the next target is the all-time high."

Overall last week, total global gold investment rose by more than 2.1% according to data compiled by London's VM Group consultancy, as a sharp rise in futures and options positions outweighed a slight fall in physically-backed ETF trusts.

In the US Comex gold futures market, "Gross longs in the large speculators' position have gone up by more than 1.5 million ounces [46 tonnes equivalent] in the past three weeks," says VM's weekly report for ABN Amro.

"On a rolling three-week basis, that's the largest advance [in speculative gold futures betting] since the same period ending 22 September 2009...when the gold price was just $1014 an ounce."

Silver investment worldwide last week showed a 6.3% rose on VM's analysis of ETF and futures positions.

Meantime in the stock market on Tuesday, European shares fell nearly 1% after Germany reported an unexpected drop in factory orders for July.

Ahead of Thursday's Bank of England policy meeting, the British Pound fell closer to last week's 1-month lows, buoying the gold price in Sterling above £810 an ounce.

Australian investors looking to buy gold today saw the price hold near A$1370 an ounce – some 11% below the record price of Jan. and May – after the central bank held its lending rate at 4.50%, the highest rate paid on a developed-world currency.

The Bank of Japan also held its key lending rate unchanged on Tuesday, sticking at 0.1% for the 20th month running after weighing a "moderate recovery" against the "possibility that inflation will rise more than expected" due to emerging-economy demand.

Refraining from any new forex-market or money-supply intervention, the BoJ repeated the same vow as the US and UK central banks to "take policy actions in a timely and appropriate manner if judged necessary."

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 and now backed by the mining-sector's World Gold Council research body – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/37603-lgmr-gold-steals-silvers-limelight-20-oz-economic-uncertainty-boosts-gold.html <![CDATA[LGMR: Gold at $1250, Silver Nears $20/Oz, Obama's $150bn Labor Day Promise "Austere"]]> http://www.gold-speculator.com/bullionvault/37513-lgmr-gold-1250-silver-nears-20-oz-obamas-150bn-labor-day-promise-austere.html Mon, 06 Sep 2010 15:44:31 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:20 ET, Mon 6 Sept

Gold at $1250, Silver Nears $20/Oz, as Obama's $150bn Labor Day Promise Called "Austere" by Krugman

THE PRICE OF GOLD rose back above $1250 an ounce for Dollar investors on Monday in what dealers called "quiet" Asian and early London trade, while European stock markets also ticked higher together with government bonds.

Silver prices came within one cent of $20 per ounce, extending last week's 30-month highs.

"Gold is sitting in a very tight range," says Andrey Kryuchenkov at VTB Capital in London, speaking to Reuters.

"The downside will be limited because of seasonality, with Asian buyers really looking to buy on any dips."

"My order book is filling-up, and I expect more to come as the Rupee has appreciated," a state-bank gold dealer in Mumbai told the Economic Times this morning.

"I have plenty of orders below $1240," said another.

Hong Kong dealers today reported "physical gold buying" by Chinese traders, but volume was light – as it was in Asian stock markets, which rose 0.8% on the MSCI index to a four-week high – in anticipation of today's Labor Day holiday in the US and Canada.

This week brings little key economic data before China's trade balance statistics on Friday.

Monetary policy meetings will meantime be held by the central banks of Japan, Australia and the UK.

"This Labor Day, we should recommit ourselves to...heal[ing] our economy. [But] we need more than a healthy stock market," said US president Barack Obama on Sunday.

"We need bustling main streets and a growing, thriving middle class. First, that means doing everything we can to accelerate job creation," he said, with a speech scheduled in Milwaukee today set to announce a new $50bn infrastructure program and also extend $100 billion of tax cuts to research & development over the next 10 years.

"President Obama's economists promised not to repeat the mistakes of 1937, when F.D.R. pulled back fiscal stimulus too soon," writes Princeton economist Paul Krugman in the New York Times.

"But by making his program too small and too short-lived, Mr. Obama did just that.
"When the economy is deeply depressed, the usual rules don't apply. Austerity is self-defeating."

Analysis from the FT today shows Eurozone governments plan to raise over $100 billion in new debt issues this month – twice the sum they raised in August.

"To guarantee the solvency of the Eurozone's periphery would require not a few quarters of solid growth, but an entire decade," notes the paper's Wolfgang Mόnchau.

Last Friday, he adds, yield spreads over comparable German Bunds – the single currency's benchmark debt, and currently offering "ridiculously low" returns – had risen back to "3.4% for Ireland, 9.4% for Greece, 3.4 % for Portugal, and 1.7% for Spain."

Over on the forex market on Monday, the British Pound fell hard against the Dollar and Euro, driving the gold price in Sterling back towards last week's two-month highs of £815 an ounce.

Euro gold prices were little changed at €31,300 per kilo.

Crude oil slipped towards $74 per barrel, but overall the major commodity indices rose.

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 and now backed by the mining-sector's World Gold Council research body – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/37513-lgmr-gold-1250-silver-nears-20-oz-obamas-150bn-labor-day-promise-austere.html <![CDATA[LGMR: Gold & Silver Fall on US Jobs Data, But "Wealth Insurance"]]> http://www.gold-speculator.com/bullionvault/37392-lgmr-gold-silver-fall-us-jobs-data-but-wealth-insurance.html Fri, 03 Sep 2010 14:12:50 GMT London Gold Market Report
from Adrian Ash
BullionVault
09:00 ET, Fri 3 Sept.

Gold & Silver Fall on US Jobs Data, But "Wealth Insurance" Needed as "Double-Dip Recession" More Likely

THE PRICE OF GOLD and silver fell hard for Euro and Dollar investors Friday lunchtime in London, with gold unwinding this week's 1.2% gains as world stock and commodity markets jumped in response to new US jobs data.

August's Non-Farm Payrolls surprised analysts with a headline drop for August of 54,000 – half the losses expected – plus stronger-than-forecast growth in private-sector hiring, up by 67,000.

"The private sector has net created a total of 622,000 jobs since last November," noted Deutsche Bank analysts ahead of Friday's announcement.

"This is still fairly low compared to the 8.459 million private jobs lost during the previous two years."

Overall, the US unemployment rate crept up to 9.6%, with average earnings rising more slowly than expected from a year earlier.

"[Gold] is what I call wealth insurance," said Peter Hambro, mining-magnate and chairman of London-listed Russia gold miner Petropavlovsk Plc, to Bloomberg earlier this week.

"Everyone has health insurance, fire insurance...Gold is what is going to protect you from the ravages of government...There is no way out for these guys except to inflate away debt.

"I'm afraid that unless you have some real assets, you're going to be in trouble."

Elsewhere on Friday, new data showed Swiss consumer prices stayed flat in August, while German and UK service-sector growth was slower than expected.

Retail sales across the 16-nation Eurozone rose by 0.1% from July, the official data agency said – just half the tepid rate of expansion analysts forecast.

"The truth is that we have not had much of a recovery in the first place," says New York professor and economics consultant Nouriel Roubini, writing for Forbes magazine, "which might prevent the economy from falling enough to display what many would label a double dip [in the US] – although we are now assigning a 40% probability to such an outcome."

Back in the gold bullion market, overnight trading in Asia was "cautious" according to one dealer's note, but the US jobs data promised "an exciting close to the week", especially with New York heading into the long Labor Day weekend.

Over in Mumbai, "There are no [gold] deals at these rates," said a state-owned bank dealer to Reuters this morning. "There is an initial resistance from traders to accept near-record prices."

Gold prices for Indian consumers – the world's No.1 buyers, now entering the strong post-harvest festival season – held just shy of recent records at 19,200 Rupees per grams on Friday.

Ahead of the peak gold demand typically seen during Dhanteras in November, "We are expecting festivals like Ganesh Chathurti and Navratri may bring in sales," said another dealer.

A Reuters poll of 10 analysts and dealers says Indian gold imports (it has next-to-no domestic gold mining output) will rise 5% to 504 tonnes in full-year 2010.

Elsewhere in the commodities market, New York crude-oil futures jumped through $75 per barrel on the US jobs data, with the broad hard-asset indices reversing an earlier drop to show a 0.5% on the day.

"We are bullish on silver," says the latest technical note from bullion-bank Scotia Mocatta, "looking for an eventual test of the 2008 high of $21.35 an ounce.

Silver traded wholesale in London today gave back 1.1% from a new four-month high at $19.76. Supporting its bullish stance, says Scotia, the Gold/Silver Ratio "broke lower" on Thursday through August's bottom, meaning that one ounce of gold is worth fewer ounces of silver.

Moving down to 63.75, the gold/silver ratio looks bullish for Silver Prices while it remains "below 64.90," says Scotia, "and we see April's low of 62.66 as the next major [level]."

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 and now backed by the gold-mining sector's World Gold Council research body – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/37392-lgmr-gold-silver-fall-us-jobs-data-but-wealth-insurance.html LGMR: Gold Ignored by US Media as Good Harvest Points to Strong Indian Demand http://www.gold-speculator.com/bullionvault/37298-lgmr-gold-ignored-us-media-good-harvest-points-strong-indian-demand.html Thu, 02 Sep 2010 14:30:00 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:45 ET, Thurs 2 Sept.

Gold Ignored & Dismissed by US Media as Good Harvest Points to Strong Indian Demand

THE PRICE OF GOLD rose back above $1250 an ounce for the second time this week – and the sixth time since May – on Thursday morning in London, as government bonds ticked lower together with energy prices.

Soft commodities rose, as did base metals and platinum. Silver prices touched a new 16-week high at $19.57 an ounce.

In the US, an article from Forbes magazine highlighting "Six Ways Retirees Can Beat Inflation" today does not mention gold investing.

"Gold has doubled since 2006," adds a personal-finance video at Yahoo.com, sponsored by the Fidelity fund group. "This train left the station a long time ago.

"So before you pour your savings into gold, be careful...A lot of the money's already been made."

Asian stock markets meantime closed Thursday 1.5% higher, but European shares stalled after Wall Street closed last night with its fourth-best one-day gain of 2010-to-date on what one London analyst called a "rather selective" reading of Wednesday's global economic data.

UK house prices today showed their second month-on-month drop in a row, while British manufacturing also contracted.

Swiss GDP growth jumped however to 3.4% annually, and the 16-nation Eurozone also grew faster than expected, with GDP rising by 1.9% year-on-year to end-June.

Inflation in Eurozone factory-input prices jumped from 3.0% to 4.0% per year in July.

Today the European Central Bank voted to keep its key interest rate on hold at 1.0% for the 16th month running.

Sterling and the Euro both fell vs. the Dollar, nudging the price of gold bullion up to £812 an ounce and €31,380 per kilo respectively.

"The maintenance of easy monetary policies and the likely reintroduction of quantitative easing policies provide the rationale for stable if not higher gold prices," says London market-maker HSBC in a note today.

Reviewing interest rates outside the US, Eurozone, Japan and UK, "Many policymakers seem to have been surprised by the strength of growth in Q2, but are also somewhat skeptical that the strong pace can continue," says Standard Bank's chief currency strategist Steve Barrow.

The Reserve Bank of Australia – where GDP growth has jumped to a 3-year high – last raised its key lending rate in May at 4.50%.

Sweden's Riksbank today raised its lending rate to 0.75%, saying that GDP growth will improve and labor demand look "substantially" better.

Over in India on Wednesday – where GDP growth for 2010 is pegged at 8.2% by Goldman Sachs' analysts – local gold prices reached new record highs above 19,230 Rupees per 10 grams, The Asian Age reports.

"Apart from bad economic news globally, a weak Rupee is also pushing up prices in India" – home to the world's hungriest gold-consumer market – the newspaper says.

Going into the traditionally strong autumn gold-buying season, "Gold consumption is expected to be strong in India this year," says Kuljeet Kataria at Motilal Oswal Securities in Mumbai, "because the monsoon has been good.

"That should lead to higher rural incomes – places where there is no [formal] banking."

"This demand from emerging countries – if it's really going to stop and fall off a cliff, it's going to be because of economic developments, not high prices," says US Global Investors' Frank Holmes, speaking last night to South Africa's MineWeb.

Worldwide, "Gold is basically looked and perceived more and more as a safe-haven investment," he adds. "The US, Western Europe and Japan are close to buckling under the weight of their own sovereign debt issues, and government budget deficits remain large and persistent and, as a result, the major paper currencies are low."

The world's seven most populous countries also have the strongest "emotional attachment" to buying gold, notes Holmes.

"The gold price could go up further...going into the Labor Day weekend," reckons Jeffrey Christian of New York's CPM consultancy, speaking to TheStreet.com and comparing this year's action "to some extent to August of 2007, when gold didn't really take an August pause."

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/37298-lgmr-gold-ignored-us-media-good-harvest-points-strong-indian-demand.html LGMR: Gold Extends 2nd-Best Annual Rise, Physical Silver Gets Tight in Hong Kong http://www.gold-speculator.com/bullionvault/37210-lgmr-gold-extends-2nd-best-annual-rise-physical-silver-gets-tight-hong-kong.html Wed, 01 Sep 2010 15:57:53 GMT London Gold Market Report
from Adrian Ash
BullionVault
09:25 ET, Weds 1 Sept.

Gold Extends 2nd-Best Annual Rise to End-Aug. as Physical Silver "Gets Tight" in Hong Kong

THE SPOT PRICE OF physical gold bullion touched its highest level since late-June's record peak early in London on Wednesday, extending August's record-high monthly close as world stock markets rose together with commodities and government bond yields.

New data showed rapid growth in Chinese manufacturing and Australian GDP.

Friday's key US employment data was preceded however by the private-sector ADP Payrolls Report, which showed its first loss since March, down by 10,000 jobs against the 20,000 growth expected.

"We are in a bind," writes Bill Gross of bond-fund giant Pimco in his new monthly outlook, urging fresh quantitative easing of mortgage-backed securities.

"Having grown accustomed to a housing market aided and abetted by Uncle Sam, the habit cannot be broken by going cold turkey into the camp of private lending...crippling any hopes of a housing-led revival to the economy."

The Dollar dropped to a 1-week low vs. the Euro on the news. The Dollar gold price retreated from $1254 to $1249 an ounce.

"[Last night's] $1247 is a new record-high monthly close," notes Russell Browne in his technical analysis from bullion-bank Scotia Mocatta, "beating June's $1241.

"Although gold price action is stepping up, we remain cautious around month end. [But] the bullish close increased the pressure for a test of the record high of $1265 and beyond."

The gold price in Dollars ended Tuesday with its best August performance since 1986, gaining 6.6% for the month.

Year-on-year, last night's record-high monthly finish saw gold stand more than 30% higher, its second-best August-to-August after 2006's 43.9%.

"Gold convincingly broke through a downwards sloping trendline yesterday," sayss a London dealer today. "The $1250 level now remains the last technical barrier to a return to the record highs of June.

"With September inflows expected, continued strength may be in store."

"Also of note is a tightening in the physical silver market," says Standard Bank's senior commodity analyst, Walter de Wet, "with increased demand from mainland China absorbing much of the silver supply traditionally coming to the wider market from Hong Kong."

Silver bullion traded in London touched a 16-week high of $19.55 an ounce on Wednesday – a level last seen at May's 14-month peak.

World stock markets meantime shot higher, with London's FTSE-100 gaining 1.5% by lunchtime.

In Athens, short-selling of Greek stocks was again allowed today, with the main index trading some 12% below the level of late-April, when a ban on "speculation" was imposed.

Alongside the Euro and Sterling, the Japanese Yen also rose again on the forex market, edging towards last week's 15-year highs at ₯83.70 to the Dollar despite Tuesday's announcement of €11 trillion ($127bn) in new fiscal and monetary stimulus.

"Too little, too late," is how former Bank of Japan policymaker Noboyuki Nakahara described it.

Faced with flagging export sales, "The [Tokyo] government is running out of policy options with interest rates this low," says CLSA's Greed & Fear analyst Christopher Woods in Hong Kong.

Reversing Tuesday's losses, the three central-bank reserve currencies knocked the gold price back by 1% from near two-month highs at £816 per ounce, €31,687 per kilo and ₯3145 per gram respectively.

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 and now backed by the mining-industry's World Gold Council – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/37210-lgmr-gold-extends-2nd-best-annual-rise-physical-silver-gets-tight-hong-kong.html LGMR: Gold Caught in Bind as Stocks Fall, Easy Money Looms, Dow/Gold Ratio Falls http://www.gold-speculator.com/bullionvault/37104-lgmr-gold-caught-bind-stocks-fall-easy-money-looms-dow-gold-ratio-falls.html Tue, 31 Aug 2010 14:55:37 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:35 ET, Tues 31 Aug.

Gold "Caught in Bind" as Stocks Fall, Fresh Easy Money Looms, Dow/Gold Ratio Falls

THE PRICE OF GOLD held in a tight range as London re-opened after the Summer Bank Holiday on Tuesday, slipping $3 an ounce to $1235 as world stock markets fell again to near the end of August some 6% down on the month.

Silver prices reversed an earlier 1.5% drop to trade back at $19.12 an ounce.

"A disappointing day for precious metals," says one Hong Kong dealer in a note.

"Despite its safe haven status, gold came off in tandem with stocks, re-visiting Friday's low."

The US Dollar slipped back against the Euro today, but crude oil dropped back through $74 per barrel and government bonds rose everywhere, nudging 10-year US Treasury yields back down to 2.50%.

"Gold is caught in a bind," reckons Tokyo trader Kazuhiko Saito at Fujitomi, speaking to Reuters.

"Slowing growth and deflation worries are generally negative for commodities, putting a cap on gold prices. [But] at the same time, easy monetary policy continues to keep expectations alive that investment funds will return to gold, putting a firm floor under the market."

A raft of better-than-expected data from Japan and Germany was outweighed according to several London analysts by Monday's poor Personal Income stats in the US, where income-growth continues to lag price inflation.

The Bank of Japan said yesterday it's injecting ₯10 trillion ($117bn) into commercial banking loans, with a further ₯920bn ($10bn) of economic stimulus promised by the Tokyo government.

But the Nikkei stock index still sank 3.6% on Tuesday, however, falling to a new 16-month low – even as the Japanese Yen eased back on the forex market – after New York's Dow Jones Industrial Average closed Monday down 1.4% to finish just a few points above the 10,000 mark, unchanged from April 1999.

The Dow/Gold Ratio ended Monday down at 8.1, meaning it would take a little over 8 ounces of gold at current prices to purchase one unit of the DJIA.

The ratio peaked just shy of 43 ounces in Sept. 1999. Averaging 12 ounces since 1928 – and falling to record lows of two ounces and then one ounce in 1932 and 1980 respectively – the ratio fell to a 19-year low of 7.4 ounces in Feb. 2009.

"It is a data-heavy week," says Walter de Wet at Standard Bank today, noting the release of manufacturing indices for all major economies, plus US jobless data on Friday.

"This could keep the market nervous...and US equities remain under pressure. The strength in US Treasury bonds is supported by expectations of possible bond purchases by the US Fed, and [we] view these expectations of further monetary easing as positive for gold."

Meantime, says Standard Bank's commodity team, "We continue to see gold buying in the physical market, although it has slowed. With gold closer to $1240 an ounce, there also appear to be some gold scrap-selling coming through."

Tuesday morning's sharp drop in Sterling pushed the gold price in British Pounds back above £800 an ounce – more than 8.4% above late July's three-month lows.

Euro investors wanting to buy gold today saw the price tick back towards €31,300 per kilo, meantime, just shy of last Thursday's eight-week highs.

In Germany this weekend, a row erupted over Dr Thilo Sarrazin, an executive member of Germany's central-bank, whose new book – which accuses Muslim immigrants of being a drain on the economy – has shot to the top of the best-seller charts.

A former member of the Berlin Senate, Dr Sarrazin "has repeatedly and persistently made provocative statements, especially on issues relating to immigration," the Bundesbank said in a press release on Monday, "categorically distancing" itself from his comments on Islam and "the Jewish gene", and threatening to take "prompt action".

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/37104-lgmr-gold-caught-bind-stocks-fall-easy-money-looms-dow-gold-ratio-falls.html <![CDATA[The Rare "Buy Stocks!" Signal That Ain't]]> http://www.gold-speculator.com/bullionvault/36942-rare-buy-stocks-signal-aint.html Fri, 27 Aug 2010 22:30:36 GMT Stock prices* Change from previous turn Div-Yield Premium over T-bonds May 1872 5.18 -0.10% June 1877 2.73 -47% 4.57% June 1881 6.58 +141% 0.74% Aug 1896 3.81 -42% 1.33% Sept 1906 10.03 +163% 0.22% Nov 1907 6.25 -38% 3.15% Dec 1909 10.30 +65% 0.37% Aug 1921 6.45 -37% 2.76% Sept 1929 31.30 +385% -0.39% June 1932 4.77 -85% 10.31% Feb 1934 11.32 +137% 0.81% * Robert Shiller's continuous S&P series from Irrational Exuberance (Wiley, 1996) No, it wasn't infallible. Like the inverted yield curve forecasting recessions, near-zero Div-Yield Premiums forecast three bear markets that failed to show (Jan. 1890, mid-1899 and spring 1905). And picking the peak in Div-Yield Premiums was a tough buy signal to follow, as the variance in our fourth column shows. But for 60 years, every significant top and bottom in US stocks was indeed marked by a relative extreme in the Div-Yield premium, at least until the signal broke down – and stocks kept paying ever-more over bonds – in the Great Depression. Image: https://mail.google.com/mail/?name=ccf32a38c42f1f28.jpg&attid=0.1&disp=vahi&view=att&th=12ab4eae17d3d6bc Image: http://www.gold-speculator.com/attachments/bullionvault/11620d1282948234-rare-buy-stocks-signal-aint-2.png So what of 2010's return to pre-Buddy Holly conditions? No idea, to be honest. Not with the UK's long Bank Holiday weekend beckoning. But we might get a quick clue from asking first: Why the late-50s' switch? The Great Depression, of course, was finally becoming faint memory, as was its record of destroying stockholders while handing deflationary gains to fixed-income bonds. Second, the idea of growth-stock investing – propounded by youngsters like Peter Bernstein himself – was starting to take hold, slowly mutating into the "cult of equity". But a third (and more critical) change, however, was in the underlying promise of return on versus return of your money. Because where risk-capital was formerly known as "equity", government bonds were fast on their way to becoming "certificates of confiscation" as the long post-war inflation took hold. So you could even put the switch down to the slow death of that natural deflation built into the _Gold Standard_ (http://goldnews.bullionvault.com/gold_standard_120120082) (or rather its step-nephew, the Gold Exchange system), starting at the very same time as US stockholders kissed goodbye to earning a premium each year above Treasury yields. From that year – 1958 – until 1971, "There was not one year," says Texas professor _Francis Gavin_ (http://goldnews.bullionvault.com/gold_fed_reserves_100120091), "when the Dollar and gold problem was not the most pressing issue of American foreign economic policy." Because America was flooding the world with Dollars, which the world in turn kept exchanging for gold, draining Fort Knox until Richard Nixon closed the Fed teller's window and the US finally abandoned its $35-per-ounce currency peg. Lacking all gold-backing today, it's plain to see that the relationship between stock and bond yields was snapped in half five decades ago. And whatever snapped it is now at stake again. Image: https://mail.google.com/mail/?name=ccf32a38c42f1f28.jpg&attid=0.1&disp=vahi&view=att&th=12ab4eae17d3d6bc So, two late-summer speculations for bargain-hungry investors: Image: http://www.gold-speculator.com/attachments/bullionvault/11621d1282948234-rare-buy-stocks-signal-aint-3.png *#1. A few days or weeks won't do it.* Last year's buy signal lasted five months, knocking a further 20% off stocks before they turned higher. The pre-1950s sell signal (then a near-zero or negative Div-Yield Premium) lasted three months or so. *#2. Should this modern "buy" signal fail,* it could fail with style, _as Tokyo bulls know_ (http://ameblo.jp/adventure123/image-10344838544-10255644891.html) only too well. Stock yields beat Japanese government bond yields four times between late 1998 and end-2007. The first three worked like a charm, but the fourth was a feint, with the Nikkei losing 52% over the next 15 months, even as JGB yields fell still further below equity's dividend yield. That's an ugly warning, in short, from the "deflation nation" everyone fears the US is aping. But to date, as the latest US housing, jobs and GDP data show, printing money has only stalled the post-bubble deflation, not reversed it. Stock buyers beware. Adrian Ash _BullionVault_ (http://www.bullionvault.com/) _Gold price chart, no delay_ (http://www.bullionvault.com/gold-price-chart.do) | _Buy gold online at live prices_ (http://gold.bullionvault.com/How/BuyGold) Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, *Adrian Ash* is the editor of _Gold News_ (http://goldnews.bullionvault.com/) and head of research at _BullionVault_ (http://www.bullionvault.com/) – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can _buy gold today_ (http://www.bullionvault.com/) vaulted in Zurich on $3 spreads and 0.8% dealing fees. (c) _BullionVault_ (http://www.bullionvault.com/) 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.]]> by Adrian Ash
BullionVault
Friday, 27 August 2010

Time was, stocks were riskier than bonds and should have the higher yield. But then came inflation...

AT THE START of this week, stocks on the Dow Jones, Tokyo Nikkei and FTSE100 in London offered a bigger dividend-yield than you'd earn in interest from their local government bonds.

"That's pretty rare, and in general has been quite a good indicator of turning points in the markets," notes the Financial Times' investment editor James Mackintosh. But it only looks rare if you ignore most of history. And it's only screamed "Buy!" once on Wall Street, back in winter/spring 2009.

Yes, this "signal" worked, notching up a 100% strike-rate for the last fifty years. But buying stocks today because their yield (only just) beats bonds might prove ill-timed if not a disaster.



For at least 75 years prior to the late-1950s, US stocks consistently paid more than 10-year Treasurys. Rather than being an eight-decade-long buy signal, however, "That was the relationship ordained by Heaven," as the late Peter Bernstein learnt from his senior partners on Wall Street.

"Because stocks were riskier than bonds and should have the higher yield."

On a monthly basis in fact (pace Robert Shiller's data), US equity yields offered investors 1.78 percentage points above Treasury yields between 1871 and 1957, with this "div-yield premium" rising from a long-term average of 1.30% to 3.02% as the Great Depression morphed into WWII and equities got riskier still.

Only twice did equity yields fall below bond yields – first in March-May 1872 and then again in July-Sept. 1929. That anomaly first marked the start of a five-year bear market, and then of the Great Crash itself. Here was a sell signal even Ken Fisher could see.


Stock prices* Change from previous turn Div-Yield Premium over
T-bonds
May 1872 5.18
-0.10%
June 1877 2.73 -47% 4.57%
June 1881 6.58 +141% 0.74%
Aug 1896 3.81 -42% 1.33%
Sept 1906 10.03 +163% 0.22%
Nov 1907 6.25 -38% 3.15%
Dec 1909 10.30 +65% 0.37%
Aug 1921 6.45 -37% 2.76%
Sept 1929 31.30 +385% -0.39%
June 1932 4.77 -85% 10.31%
Feb 1934 11.32 +137% 0.81%
* Robert Shiller's continuous S&P series from Irrational Exuberance (Wiley, 1996)

No, it wasn't infallible. Like the inverted yield curve forecasting recessions, near-zero Div-Yield Premiums forecast three bear markets that failed to show (Jan. 1890, mid-1899 and spring 1905). And picking the peak in Div-Yield Premiums was a tough buy signal to follow, as the variance in our fourth column shows.

But for 60 years, every significant top and bottom in US stocks was indeed marked by a relative extreme in the Div-Yield premium, at least until the signal broke down – and stocks kept paying ever-more over bonds – in the Great Depression.



So what of 2010's return to pre-Buddy Holly conditions? No idea, to be honest. Not with the UK's long Bank Holiday weekend beckoning. But we might get a quick clue from asking first: Why the late-50s' switch?

The Great Depression, of course, was finally becoming faint memory, as was its record of destroying stockholders while handing deflationary gains to fixed-income bonds. Second, the idea of growth-stock investing – propounded by youngsters like Peter Bernstein himself – was starting to take hold, slowly mutating into the "cult of equity".

But a third (and more critical) change, however, was in the underlying promise of return on versus return of your money. Because where risk-capital was formerly known as "equity", government bonds were fast on their way to becoming "certificates of confiscation" as the long post-war inflation took hold. So you could even put the switch down to the slow death of that natural deflation built into the Gold Standard (or rather its step-nephew, the Gold Exchange system), starting at the very same time as US stockholders kissed goodbye to earning a premium each year above Treasury yields.

From that year – 1958 – until 1971, "There was not one year," says Texas professor Francis Gavin, "when the Dollar and gold problem was not the most pressing issue of American foreign economic policy." Because America was flooding the world with Dollars, which the world in turn kept exchanging for gold, draining Fort Knox until Richard Nixon closed the Fed teller's window and the US finally abandoned its $35-per-ounce currency peg.

Lacking all gold-backing today, it's plain to see that the relationship between stock and bond yields was snapped in half five decades ago. And whatever snapped it is now at stake again.

So, two late-summer speculations for bargain-hungry investors:



#1. A few days or weeks won't do it. Last year's buy signal lasted five months, knocking a further 20% off stocks before they turned higher. The pre-1950s sell signal (then a near-zero or negative Div-Yield Premium) lasted three months or so.

#2. Should this modern "buy" signal fail, it could fail with style, as Tokyo bulls know only too well. Stock yields beat Japanese government bond yields four times between late 1998 and end-2007. The first three worked like a charm, but the fourth was a feint, with the Nikkei losing 52% over the next 15 months, even as JGB yields fell still further below equity's dividend yield.

That's an ugly warning, in short, from the "deflation nation" everyone fears the US is aping. But to date, as the latest US housing, jobs and GDP data show, printing money has only stalled the post-bubble deflation, not reversed it.

Stock buyers beware.

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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.
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]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36942-rare-buy-stocks-signal-aint.html <![CDATA[LGMR: Gold Trading "Quiet" as Summer Ends, "Big Surge" Expected on Poor US Data]]> http://www.gold-speculator.com/bullionvault/36911-lgmr-gold-trading-quiet-summer-ends-big-surge-expected-poor-us-data.html Fri, 27 Aug 2010 17:31:01 GMT London Gold Market Report
from Adrian Ash
BullionVault
09:00 ET, Fri 27 August

Gold Trading "Quiet" as Summer Ends, "Big Surge" Expected on Poor US Data

THE PRICE OF GOLD held flat early in London today, heading into the long August Bank Holiday weekend some 0.8% higher from last Friday's close against the Dollar, Euro and Sterling.

The Silver Price stood 5.7% up for the week, nearing its best weekly close since late-June.

A further rally in Asian stocks meantime failed to buoy European shares, while commodities and G7 government bonds were also unchanged.

Ahead of US Fed chairman Ben Bernanke speaking at the Jackson Hole central-banking symposium today, upwardly revised US growth data failed to move the major currency crosses, save for extending the Japanese Yen's retreat from this week's 15-year highs.

In wholesale Gold Trading, London "was rather quiet" on Thursday and overnight volumes in Asian trade were "almost non- existent" according to one dealer today.

"The northern summer months have been weak for gold in more years than not," writes former mining exec' and industry journalist Lawrence Williams at MineWeb.

"In fact this year has been a bit of an exception with prices holding up remarkably well.

"Some take this as a pointer to a big surge ahead after the US Labor Day holiday [on Mon 6 Sept.] once market activity returns to normal in mid-September. We will see."

US investors saw the gold price slip 8.2% from June's record high to the summer's low of $1158 per ounce one month later.

Gold prices have risen between end-June and New Year's Eve in 21 of the last 30 years.

By the start of New York dealing on Friday, the metal was $4 below the second-quarter's finish of $1244 an ounce.

"Precious metals [have seen] high volatility in thin trading," says German refiner Heraeus's head of sales Wolfgang Wrzesniok-Rossbach.

In the retail gold investment space, "German demand for precious metals bars in the past two weeks, despite negative reports on economic developments in other nations...and with their own economy doing well...did not get rekindled.

"Additionally, there has been an increase in critique on gold in the press, especially the rather negative [Euro gold] chart-picture."

Heraeus' team, however, are not as "skeptical" of the short-term gold price "as some of the technically-oriented analysts," Wrzesniok-Rossbach says, citing instead the worsening economic and financial situation in the US and some Eurozone states.

"With low interest rates foreseeable for an extended period of time, this speaks positively for gold. In any case the downward risk appears to be much lower for gold than for the [industry-reliant] platinum-metals."

Also noting the diverging path of much US and German data, "The Fed has an employment issue, and [the European Central Bank's] Trichet does not," says Diane Swonk, chief economist at Mesirow Financial in Chicago – and an attendee of this weekend's Jackson Hole conference in Wyoming – speaking to Bloomberg.

"The ECB seems to be viewing the world more optimistically and the Fed more pessimistically," says former Bank of England policy-maker Julian Callow, now chief economist at Barclays Capital.

Next Friday will bring US employment data for August, and "on further deterioration and another round of significant stimulus, inflation will sneak closer to the front of investors' minds," reckons analyst Daniel Major at RBS in London.

"That would be positive for the gold story.

"Should we see a meltdown in economic data, stimulating significant safe-haven inflows...we could see significant further gains."

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36911-lgmr-gold-trading-quiet-summer-ends-big-surge-expected-poor-us-data.html <![CDATA[LGMR: Silver "Still Cheap" After "Dramatic Move"]]> http://www.gold-speculator.com/bullionvault/36820-lgmr-silver-still-cheap-after-dramatic-move.html Thu, 26 Aug 2010 17:05:52 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:50 ET, Thurs 26 August

Silver "Still Cheap" After "Dramatic Move" as Gold/Silver Ratio Forms "Explosive" Pattern

THE PRICE OF GOLD and silver touched new 8-week highs in London dealing on Thursday, while the Japanese Yen retreated further and developed-world stock markets extending yesterday's rally on Wall Street.

G7 bonds slipped back, nudging yields higher from this week's record lows.

Crude oil pushed higher again, unwinding a third of this month's 7% drop at $73 per barrel.

"Base metals have [also] staged a rebound," notes Standard Bank's commodities team today, but "precious metals continue to push higher, adding weight to our assertion that equity markets and base metals are largely being driven by bargain-hunting rather than resurgent risk appetite."

"Gold is now open to the next leg higher from $1256 to $1265," says Russell Browne at bullion bank Scotia Mocatta in his latest technical analysis.

"Silver [also] made a dramatic move to $19.05...and the Gold/Silver Ratio dipped to 65.44, its third consecutive day moving lower."

A falling Gold/Silver Ratio – which has averaged 61 over the last 10 years – means it takes fewer ounces of silver to buy one ounce of gold.

The ratio "has focused itself ever more tightly into a potentially explosive arrowhead, right on a long-term mean," writes Sean Corrigan at Diapason Commodities in Lausanne, Switzerland.

"The intriguing thing is that gold outperforms [silver] when the stock market is weakening, so adding urgency to the question which way the ratio might go next."

Interviewed by Bloomberg today, "Silver is looking cheap and we're seeing strong investment demand for small ingots, as well as good industrial demand from solar-panel makers," reported Dick Poon, head of precious metals trading at the Heraeus refinery group's Hong Kong office.

Over on the currency markets on Thursday, the British Pound gave back half-a-cent of yesterday's jump towards $1.56, holding the gold price in Sterling above £800 an ounce – a six-week high broken for the first time on the way up in May.

Eurozone investors wanting to buy gold today meantime saw the price rise above €31,300 per kilo, gaining 3.2% from Tuesday's dip.

Money-supply growth ticked higher across the 16-nation Eurozone in July, the European Central Bank said, but lagged analyst forecasts at 0.2% month-on-month.

Ahead of monthly US employment data next week – a key mover recently for the Dollar and gold prices – new figures today showed both new and continuing jobless benefit claims slipping last week.

"Whilst we are getting any negative data, you can expect gold to benefit," said Investec Australia's Darren Heathcote to Reuters this morning in Sydney.

"I still don't see it really moving substantially lower in the short term."

Looking further ahead, and even on a 20% slump, "We do not believe the price can fall below $800 an ounce for long," says Edward George, senior economist at the Economist Intelligence Unit, speaking to The Guardian, "as over half of current gold mining operations are only profitable at a price of at least $1,000.

"If the price falls below this level for a long time they will simply stop producing, reducing supply and ultimately driving up the price again."

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36820-lgmr-silver-still-cheap-after-dramatic-move.html LGMR: Gold Hits 8-Week High, Investment Pushes Global Demand to Q2 Record http://www.gold-speculator.com/bullionvault/36714-lgmr-gold-hits-8-week-high-investment-pushes-global-demand-q2-record.html Wed, 25 Aug 2010 17:08:53 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:25 ET, Weds 25 August

Gold Hits 8-Week High as Stocks Fall, Investment Pushes Global Demand to Q2 Record

THE PRICE OF GOLD rose to an 8-week high Wednesday morning in London, rising 2.2% from yesterday's spike lower as world stock markets continued to slide in thin trade.

"Tuesday was a wild day in the precious complex," says a note from Mitsui's London team, "and perhaps a sign of things to come as the summer months draw to a close.

"Downside risks to the economy continue to emerge."

Tuesday's worse-than-expected US home sales figures were today followed by Japan's corporate-service costs falling for the 22nd month, down by 1.2% year-on-year in July.

Crude oil edged lower while base metals fell to a 1-month low in London dealing.

Five-year US bonds also slipped in price, even as German and UK debt rose, nudging yields upwards from a 20-month low ahead of today's $36bn auction of new debt.

The gap between Irish and German bond yields reached a new record high, widening to 329 basis points as Dublin's debt fell – and Berlin's rose yet again – following Tuesday's downgrade of Ireland's credit to "AA-" by the S&P ratings agency.

The Euro today fell back towards 6-week lows near $1.26, pushing the gold price in Euros up to its strongest level since 1st July at €31,500 per kilo.

"Germany came in as the world's largest purchaser of retail gold investment products during the second quarter," writes Rhona O'Connell of GFMS Analytics at MineWeb today, commenting on the latest Gold Demand Trends report from research and marketing group the World Gold Council.

This spring's Greek deficit crisis saw Germany "registering Europe's largest year-on-year increase [in gold investment demand] of 59% and Switzerland up by 19%," says O'Connell.

"France experienced fresh purchases, but also profit taking...[but] the premium on certain bullion coins in France was reportedly pushed up towards 15% during the quarter."

Overall, and after falling by one quarter year-on-year in the first quarter of 2010, global gold demand – as identified by research from GFMS Ltd – rose to a series record for April-June, swelling by 36% from the same period last year to more than 1,050 tonnes.

The Q2 record came despite a 30% year-on-year rise in the gold price.

Electronics demand rose sharply, says the WGC, as did Chinese household demand. Private investment demand from Western Europe represented 35% of global gold coin and small bar purchases, down from 2009's average of 40%, but sharply higher from the 7% level of early 2008.

"Many of these buyers undoubtedly turned to gold as a 'flight to quality'," says the WGC's, "prompted by the credit crunch and its aftermath.

"[But] their return to gold has proved resilient."

Massively underperforming the Euro gold price across the last 10 years, European shares today matched New York's 1.8% loss for the week so far by lunchtime in London.

Tokyo's Nikkei share index closed Wednesday nearly 1.7% down at a new 15-month low, despite the Yen retreating on the forex market after finance minister Yoshihiko Noda said he will "respond appropriately as needed" to weaken the currency.

Analysts believe that every ₯1 fall in the US Dollar cuts 0.9% off Japanese exports profits.

Tokyo bought some $800bn in the five years to 2005 in an attempt to weaken the Yen on the forex market.

The currency's Dollar exchange-rate was little changed, however, since rising a further 25% to yesterday's 15-year high.

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36714-lgmr-gold-hits-8-week-high-investment-pushes-global-demand-q2-record.html <![CDATA[LGMR: Gold Falls with Stocks & Euro as Yen Hits 15-Year High, Fed Prepares Fresh QE]]> http://www.gold-speculator.com/bullionvault/36615-lgmr-gold-falls-stocks-euro-yen-hits-15-year-high-fed-prepares-fresh-qe.html Tue, 24 Aug 2010 16:59:35 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:45 ET, Tues 24 August

Gold Falls with Stocks & Euro as Yen Hits 15-Year High, US Fed Prepares Fresh Quantitative Easing

THE SPOT PRICE of wholesale gold dropped to a 7-session low Tuesday lunchtime in London, as world stock markets fell hard in thin trade and the Japanese Yen reached a new 15-year high vs. the Dollar.

"Monday was about as quiet as it gets," says one London bullion dealer in a note.

"Lower gold [today] attracted only light physical interest," a Hong Kong dealer adds.

Versus the Dollar, the British Pound fell to a 1-month low and the Euro hit a 6-week low on the forex market, stemming the gold price drop to £787/oz and €30,920/kg respectively.

Against the Yen, gold fell to a two-week low of ₯3270 per gram. The Euro dropped to its worst level since late 2001 at ₯105.50.

Silver meantime tested last week's lows versus the Dollar, but hit its lowest level against priced in Yen since mid-March.

New data meantime confirmed Germany's 4.1% year-on-year GDP growth for the second quarter, but industrial orders across the 16-nation Eurozone were weaker than analyst forecasts for June.

Ahead of this weekend's Jackson Hole central-banking summit in Wyoming, the Wall Street Journal today reports that the US Fed is moving to expand its program of quantitative easing after a heated debate at this month's policy meeting.

"We sent some garbled message about a weaker economy where we wanted to be more accommodative," the paper quotes Charles Plosser, head of the Philadelphia Fed,

Despite Fed chairman Ben Bernanke preparing to increase the Fed's $2 trillion balance-sheet by buying more bonds, "That was confusing and ran the risk of scaring the markets," says Plosser.

Back in Tuesday's action, "The losses on equity markets in Asia and Europe indicate that risk aversion is rising," notes Standard Bank's commodities team, but "this has not translated into the usual price increase for precious metals.

"Along with base metals, crude oil is bearing the brunt of the pessimistic global economic outlook."

US oil futures contracts today slipped for the fifth session running, dropping to a 6-week low near $72 per barrel, after China reported a 3% year-on-year drop in July's imports of crude.

G7 government bond yields meantime fell again as prices rose, driving the two-year US yield down towards last week's record low despite the looming sale of $37 billion in new two-year debt.

Noting the seasonally thin trading volumes in stocks and precious metals, "It's going to be choppy for the next one-and-a-half weeks," reckons Afshin Nabavi, head of trading at Swiss refinery MKS's Finance division.

Forecasting a strong recovery in physical gold demand, "The Indian festival is coming in and the funds will finish their holidays," says Ronald Leung of Hong Kong's Lee Cheong Gold Dealers, also speaking to Reuters.

But for now, however, it's "imitation gold jewelry that is flying off the shelves in Mumbai," reports Shivom Seth for Mineweb today.

"With gold prices testing multi-week highs and staying strong" against the Rupee, "physical demand has taken a beating, and consumers are preferring to opt for lower carats and for costume jewelry made out of 1 carat gold."

As India celebrates the family festival of Raksha Bandhan today, "We had hoped that the demand for gold jewelry would see a major spike during this time," says one Mumbai retailer, "since brothers and sisters buy gold jewelry as gifts for their siblings."

But "The price of gold has risen by 25% in the past seven months...[and so] youngsters are buying 12-carat or imitation gold jewelry at cheaper prices."

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36615-lgmr-gold-falls-stocks-euro-yen-hits-15-year-high-fed-prepares-fresh-qe.html LGMR: Gold Enters Strongest Period, Eurozone Debt Crisis Returns http://www.gold-speculator.com/bullionvault/36521-lgmr-gold-enters-strongest-period-eurozone-debt-crisis-returns.html Mon, 23 Aug 2010 16:50:01 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:25 ET, Mon 23 August

Gold Enters "Strongest Period" as Eurozone Debt Crisis Returns, US Fed "Playing with Fire"

THE PRICE OF GOLD in wholesale dealing held flat Monday morning in London, easing down to $1226 an ounce as European stock markets rose but government bonds and traded commodities were also unchanged.

"The Federal Reserve has begun to play with fire, the effects of which I doubt Bernanke fully appreciates," writes John Hussman of the eponymous $6.3bn asset management group in the US, extending his Strategic Total Return Fund's exposure to precious metals to 10%.

Following the Fed's revival of quantitative easing at the start of this month, "We would prefer the opportunity to accumulate a larger exposure [to gold investment] on substantial price weakness," Hussman adds, noting that "Mining stocks have essentially gone nowhere since May."

"The markets dip in May and come back after the summer," said Swiss-based fund manager Patrick Pittaway of URAM to CityWire last week.

"From today onwards this is the strongest time for gold."

A report from Canada's CIBC research firm, also quoted by CityWire, says gold has risen in sixteen of the last 20 Septembers.

Weak data from France and Germany meantime kept the Euro currency under pressure on Monday morning, pushing it back below $1.27 after Friday's two-cent loss.

The gold price in Euros held above €31,100 per kilo, just shy of Friday's new 7-week high.

German Bund prices edged higher, even as Eurozone stock markets rose up to 1%. But weaker Eurozone debt prices fell again, pushing the gap between German and Irish yields "back towards the levels last seen in May," according to the FT's Alpha blog – "before the European Union's €750bn bailout package for troubled sovereigns was announced."

"The slide in debt prices has not been confined to the 'periphery' however," says Bank of New York Mellon analyst Neil Mellor.

"Notably the yield spread on French 10-year debt over Bunds has also risen 0.1%" in the two weeks since the Federal Reserve spooked investors by reviving its quantitative easing program by recycling $150bn in maturing mortgage-backed bonds into US Treasury debt.

Anglo Irish Bank today transferred £6 billion of poorly performing loans (US$9.3bn) to Dublin's government-owned "bad bank", reports Reuters, accepting a discount of 61% for using the facility.

In Madrid, Spain's secretary of state for social security, Octavio Granado, is quoted by finance paper Cinco Dias as saying that – by the end of 2010 – some 90% of all Spanish pension savings will be invested in domestic government debt, thanks to the government buying its own bonds with the national retirement fund.

"Our data show that there has been renewed buying of German debt in August," says Mellor at BNY Mellon, "whilst there has been a sharp resumption in selling of Italian debt after a period of respite."

After last week's multi-year and new record lows in a raft of US, Japanese and German yields, "Bond markets have rallied pretty dramatically in recent weeks," says Steve Barrow at Standard Bank.

"We suspect this is down to a surge in fear."

Back in the gold market, new data from US regulator the Commodity Futures Trading Commission said late on Friday that the recovery in gold futures demand continued last week, with hedge funds and other large speculators now well over 90% bullish again after July's dip to 86%.

That compares to the five-year average of 83%.

"Gold has had a pretty much straight line run-up this month and is now getting overbought to a degree that is not sustainable," reckons Phil Smith in his Reuters Technical analysis from Beijing.

But finishing "in positive territory in fourteen of the last eighteen trading days," notes a London dealer today, "it will take a more significant retracement than this one to break the 4-week uptrend."

Last week saw the SPDR Gold Trust – the world's largest exchange-traded gold fund, with some 1300 tonnes of metal – regain another third of last month's 3% drop in its gold bullion holdings.

"[Gold] is unlikely to materially weaken," agrees the latest technical note from bullion bank Scotia Mocatta, "unless it drops below trend line support at $1221.

"Accordingly, we view the current uptrend to still be intact."

Silver prices edged further down, meanwhile, from last Friday's 5-week closing low of $18.02 an ounce.

Crude oil was little changed early Monday near $74 per barrel.

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36521-lgmr-gold-enters-strongest-period-eurozone-debt-crisis-returns.html LGMR: Gold Nears 1% Week-on-Week Gain, Fed Likely to Extend Money-Creation http://www.gold-speculator.com/bullionvault/36439-lgmr-gold-nears-1-week-week-gain-fed-likely-extend-money-creation.html Sat, 21 Aug 2010 00:28:02 GMT London Gold Market Report
from Adrian Ash
BullionVault
09:25 ET, Fri 20 August

Gold Nears 1% Week-on-Week Gain as Stocks Fall, US Fed "Likely" to Extend Money-Creation

THE PRICE GOLD fell $10 an ounce from Thursday's new 7-week high in light wholesale dealing today, nearing the weekend 1% up from last Friday as world stock markets extended their drop.

Government debt prices rose, pushing two-year US yields down to new all-time lows as the Japanese Yen flirted again with a 15-year high to the Dollar.

Crude oil struggled below $75 per barrel. Silver prices gave back the last of the week's gains, trading down to $18.12 per ounce.

"After years of being long, [we now] see gold as vulnerable to central bank inactivity in the face of rising deflation risk," Goldman Sachs' Market Pulse team advised a select group of institutional clients this week.

Last week, Goldman Sachs' commodities analysts publicly raised their 2010 price-target to $1300 an ounce.

The investment bank's Market Pulse advice – not intended for the general public, but posted on the ZeroHedge site – jars however with its own stated view that the US Fed "is likely to resume quantitative easing" before the end of 2010.

More central-bank money creation "is possible," says Standard Bank's chief forex strategist Steve Barrow today, "and is not a source of future strength" for developed-world currencies."

"We've long held the view that liquidity (not necessarily inflation) drives commodity prices higher," writes Barrow's colleague Walter de Wet, "and gold benefits the most from this effect."

Peaking after the first wave of quantitative easing in July 2009, the US money supply "is again trending higher," says Standard Bank's senior commodity analyst.

"We view this as a positive sign, especially for gold."

After Thursday's weak US jobs and business figures sent New York stocks sharply lower in thin trade, economic data releases were confined today to Canada, where the Consumer Price Index showed its second month-on-month fall in succession for July.

The Canadian Dollar fell on the news, helping the CAD gold price hit its best level since 1 July at $1292 per ounce.

The British Pound meantime dropped out of this week's tight trading range, pushing the gold price in Sterling up to a five-week high of £796 an ounce.

The Euro also fell hard, dropping to a 7-week low against the Japanese Yen and slipping below $1.27 in Dollars.

Eurozone investors wanting to buy gold today saw the price rise to its highest level since 2 July above €31,180 per kilo.

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36439-lgmr-gold-nears-1-week-week-gain-fed-likely-extend-money-creation.html LGMR: Gold Hits New 7-Week High as Ex-Hedger Barrick Forecasts Higher Prices to Come http://www.gold-speculator.com/bullionvault/36308-lgmr-gold-hits-new-7-week-high-ex-hedger-barrick-forecasts-higher-prices-come.html Thu, 19 Aug 2010 17:11:55 GMT London Gold Market Report
from Adrian Ash
BullionVault
08:55 ET, Thurs 19 August

Gold Hits New 7-Week High as Ex-Hedger Barrick Forecasts Higher Prices to Come

THE PRICE OF GOLD in London's wholesale market reached new 7-week highs for Dollar investors Thursday lunchtime, rising above $1234 an ounce as bond prices slipped and commodities held flat.

Silver prices were little changed around $18.50 an ounce, while Western stock markets cut an earlier 0.5% gain following worse-than-expected US jobless claims data.

"Consolidation above $1190 is bullish [for gold]," says a note from Barclays Capital, quoted by Reuters, "and we continue to expect resistance at $1242 eventually to give way and gold to test $1350 later in the year."

"The technical picture for gold is looking quite strong at the moment," agrees a London dealer. "There is little major resistance from here to the record highs of June."

Even at current levels, "We don't expect scrap selling to become a dominant force soon," says Standard Bank, but "with the gold price around $1230, gold physical demand continues to slow, and we expect this to remain the case."

Gold Trading in India, the world's No.1 consumer market remains typically quiet, says the Economic Times today, ahead of the autumn festival season starting later this month.

"These price levels are dissuading buyers," the paper quotes one Mumbai bank dealer.

Local bullion prices today rose to the equivalent of US$1265 an ounce, says the Times of India – a 7-week high more than 3% above this morning's spot gold prices in London, heart of the world's wholesale bullion market.

Local gold prices are also rising sharply across the border in Nepal, the Himalayan Times reports, with the central bank's cap on physical imports and bank sales pushing gold above the equivalent of US$1300 per ounce.

"Economic conditions [globally] are more likely to increase gold prices than the other way around," said Peter Munk, chairman of the world's largest gold miner, Barrick Mining, in a Bloomberg interview today.

Defending Barrick's much-criticized hedge book of forward sales – and saying he sees no need to hedge again any time soon – "Conditions were so dramatically different a decade ago, two decades ago," Munk went on.

Barrick's forward sales, built up during the bear market of the 1990s, peaked at an outstanding position of 750 tonnes in 2001 according to VM Group data. It was closed in late 2009, with gold some 265% more expensive to buy.

"We hedged [future production] for 10 years and it paid off," says Munk.

Since Barrick's hedge book was closed last October, its stock has gained 22%, very nearly matching the rise in spot gold on the wholesale, professional market. Over the previous eight years, Barrick shares rose by 120%, underperforming gold by more than one-half.

Over on the currency markets meantime on Thursday, the Euro rallied from near 4-week lows vs. the Dollar beneath $1.28.

Eurozone investors wanting to buy gold saw the price slip from a fresh 5-week high above €30,960 per kilo.

The gold price in Sterling also fell from its strongest level since 15 July – dropping 1.1% from £793 an ounce – as British Pound shot higher on stronger-than-expected UK retail sales and money-supply growth, plus below-forecast government borrowing for July.

Once again reversing the previous day's losses, however, Sterling then failed to hold above $1.5650 however for the fourth session running.

Government bonds also edged back as equities rose, slipping from Wednesday's record levels and nudging up Japanese yields from 7-year lows.

US yields bounced from their lowest level since the stock-market hit a 12-year low in March 2009.

Ten-year German Bund yields ticked higher from yesterday's new record low of 2.30%.

"I am going to sell bonds short," said best-selling investment author and hedge-fund legend Jim Rogers to the Financial Times last week – "but I'm not going to short them now because the central banks have more money than I do.

"If the economy gets worse, then they are going to print money, which is good for silver and gold. If the economy gets better, more commodities will be bought."

Adrian Ash
BullionVault

Gold price chart, no delay | Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen's Award for Enterprise Innovation, 2009 – where you can buy gold today 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. ]]> BullionVault GoldSpeculator http://www.gold-speculator.com/bullionvault/36308-lgmr-gold-hits-new-7-week-high-ex-hedger-barrick-forecasts-higher-prices-come.html