Short covering, triggered by rumours of a potential US downgrade from Moody’s, are sending gold and silver prices vertical. The move higher comes after a very suspicious spike this night in which the silver price was pushed 10% lower within the first hour of Asian trading (with a bank holiday in Europe). The charts show the price action in today’s trading sessions. In our own words: folly of the highest degree, or the metals being subject to greediness of traders.
Tag: euro crisis
The trend towards political influence is not restricted to the euro area. It is a global phenomenon. The central banks have taken on fire-fighting tasks in the crisis and in the process have also blurred the boundary between monetary policy and government fiscal policy.
There could be another much bigger raid and Cyprus may be the front runner to desensitize everyone. There could be more shock (Uranus conj. Mars) in Europe over the weekend. Perhaps an epic conditioning experiment and there is risk of this “deposit tax” in American banks next year.
We wrote very recently that gold is considered a fear trade in the West, opposed to a love trade in the East. Anecdotal evidence is to be found in the following two charts. The first one shows the frequency of the words “euro crisis” in Bloomberg’s headline. The second is the euro gold price over the same period of time. There is an almost one-on-one correlation between both.
Gold Prices hovered near seven-month highs above $1780 per ounce for most of Friday morning in London – a few Dollars up on where they started the week – while stocks failed to hold early gains after a analysts interpreted Spain’s budget as “laying the groundwork” for a formal bailout. Silver Prices eased to $34.73 per ounce after failing to breach $35, while other commodities were broadly flat and US Treasury bonds gained. Euro Gold Prices meantime remained close to all-time highs hit yesterday. “The debt crisis in the Eurozone has escalated again,” says today’s commodities note from Commerzbank. “Gold should therefore remain in high demand as a store of value and alternative currency. [...]
So for at least the second time in four months, today’s Handelsblatt newspaper in Germany carries a big picture of Edvard Munch’s The Scream, writes Adrian Ash at BullionVault. This time, the picture doesn’t replace the painter’s tortured self-portrait with chancellor Angela Merkel’s head. The headline is now “Angst of the Germans“. But the subject is the same. “Nothing frightens the German people so much as the Euro debt crisis,” says the newspaper. The most over-insured people in the world, Germany naturally shares its fears in a survey conducted for an insurance company’s PR department – and at 73%, fear of the Eurozone crisis now tops even its reading 12 months ago, when the crisis tipped [...]
Two Bloomberg correspondents reported on August 8 that the US Government’s unfunded liabilities rose by $11 trillion last year, “ten times larger than the official deficit”, and are now at an estimated $222 trillion. The authors base their estimates on figures supplied by the Congressional Budget Office. This makes talk about the “fiscal cliff”, as the Bush tax cuts come to an end, a secondary issue. Meanwhile in Germany the Constitutional Court will be told on 12 September that the bailout costs faced by Germany are €2 trillion with a further €1.7 trillion in the pipeline, compared with only €170 billion a year ago. In contrast with these accelerating deficits, the gold price has [...]
Hopes for a further crisis response by the European Central Bank (ECB) cheered the markets yesterday, with a declining dollar giving support to rallies in commodities and precious metals prices. Though discounted and criticised by the German Bundesbank, the market continues to be optimistic that the ECB will soon act to cap peripheral bond yields. These hopes might in part be attributed to the growing dissent between the Bundesbank and the ECB, as it is looking increasingly likely that the Bundesbank would be left standing when push comes to shove. A clear hint could be seen in the publically voiced support for the ECB’s bond purchases by the German member [...]
Gold Prices eased lower in Friday morning’s London trading, hovering around $1610 per ounce for most of the session, as stock markets also edged lower and US Treasuries gained, after trade data from China provided further signs of economic slowdown. China’s trade surplus fell by 20% month-on-month in July, with both import and export growth slowing, according to official data published Friday. “Monetary policy easing has to be more aggressive in the remainder of the year…[to avoid a] hard landing,” reckons Liu Li-Gang, Hong Kong-based head of Greater China economics at ANZ Bank. “Gold is trading broadly in line with other asset classes this morning as you see disappointment in [...]
Gold Bullion prices climbed to $1596 per ounce during Friday morning’s London trading, recovering some ground following three days of losses, as stock markets also rebounded ahead of the release of US nonfarm payrolls data later today. Silver Bullion climbed back above $27.30 per ounce, in line with where it closed two weeks ago, while other industrial commodities also edged higher. Heading into the weekend, Gold Bullion looked set for a 1.7% weekly loss by Friday lunchtime in London. Gold Prices fell sharply on Wednesday following a better-than-expected ADP Employment report, a privately-produced precursor to today’s official nonfarms figure. Gold then fell again Thursday along with the Euro, after the [...]
Wholesale prices for Gold Investment bars struggled just above $1600 per ounce in London on Thursday, after dipping below that level for the first time in a week as the US Federal Reserve left monetary policy unchanged yesterday. “You can say that immediate QE is off the table,” reckons Frank McGhee, head of precious metals trading at Integrated Brokerage Services in Chicago. “I will probably not be surprised to see them not do anything in September either,” he adds. The Bank of England followed the US Fed in leaving UK policy unchanged in its midday announcement today. The European Central Bank was also expected to make no change to its record-low rates [...]
Gold Prices held steady above $1620 per ounce during Tuesday morning’s London trading, while stocks and commodities were also broadly flat and major government bond prices ticked higher with markets looking ahead to key central bank policy decisions later in the week. Silver Prices meantime hit a four-week high at $28.47 per ounce. “With wider markets setting the flow direction for [gold] bullion, underlying demand for the metal remains soft and has barely provided any significant direction,” says a note from Swiss precious metals refiner MKS. “Gold may come under some pressure in the run-up to this week’s central bank meetings,” adds a note from Australian and New Zealand bank ANZ, referring [...]
The Gold Price continued to weaken Thursday morning in London, dropping to new 2-week lows beneath $1565 per ounce on what analysts called “disappointment” with the latest monetary policy minutes from the US Federal Reserve. Asian and European stock markets fell hard, while wheat and corn prices again bucked a further drop in the commodities market. Following the US Fed minutes – which showed only a “few” policy-makers wanting to expand the central bank’s quantitative easing money creation scheme – the Euro currency today dropped to its lowest level since June 2010 below $1.21. Silver Bullion also gave back the last of July’s rally to date, trading back below $27.75 per ounce. “We [...]
Gold Bullion rose to $1597 per ounce Tuesday morning in London – its highest level so far this week – as stock markets also ticked higher following news that Spain should receive some financial assistance for its banks later this month. Silver Bullion also gained, climbing as high as $27.61 per ounce, while other commodities were broadly flat. US, UK and German government bond prices fell, while on the currency markets the Dollar gave back early gains against the Euro, with the latter rallying back above $1.23. “Loose monetary policies, with a scope for more aggressive balance sheet use in the US and Europe, will keep real [interest] rates in most reserve [...]
Gold Prices held above $1580 per ounce during Monday morning’s London trading – broadly in line with where they ended last week – while most European stock markets were broadly flat on the day, with the exception of Spain’s. Gold Prices ended down last week, falling back below $1600 on Friday, following the release of June’s US nonfarm payroll data, which showed the economy added 80,000 private sector jobs last month. Although this was lower than many analysts’ forecasts, it was higher than a month earlier. April and May’s nonfarms figures were revised higher, while unemployment held steady at 8.2%. “[Last week was] the ninth consecutive week where gold has alternated between [...]
Sometimes bailouts do not achieve what is intended, which is one reason they should be avoided. The people of Iceland apparently have some discerning insight into this basic financial reality. When a financial collapse over three years ago sent their economy into a tailspin, Icelanders were given a chance to vote on whether they should impose more debt on themselves in order to bail out insolvent banks. The Icelanders decided to reject the proposed debt burden and the accompanying draconian austerity that would be required. As it turns out, they chose wisely. Happily, Iceland’s economy is back on its feet. As the BBC reported a few months ago: “Iceland is [...]