Gold fell initially after the QE2 announcement yesterday
prior to recovering and it then rose steadily in after hours Asian and again
in early European trading. Gold has risen to $1,362/oz due to the dollar
falling and oil and commodities rising significantly in the aftermath of the
announcement of the new $600 billion of quantitative easing.
Gold is currently trading at $1,362.30/oz,
Gold is now only 2% below its recent nominal record high
on October 14th ($1,387.35/oz) and after a period of consolidation the trend
would suggest that $1,400/oz remains a near term target. Silver traded
erratically yesterday with unusual price swings prior to reasserting its
upward momentum and rising to new 30 year highs at $25.40/oz this morning.
Equities internationally have surged but it is hard to
know if this is due to a belief that the US and global economic recovery
might continue or is it due to some market participants using equities as an
inflation hedge. Long dated US treasury bonds fell sharply yesterday and
concerns about significant overvaluation in bond markets, particularly as
commodity prices are back near the higher levels seen in mid 2008, are valid.
The assumption that commodities are in a bubble is wrong
as many commodities are well below their recent highs in mid 2008 when the
Thomson Reuters/Jefferies CRB Index was trading as high as 473 (see chart).
Today the benchmark commodities index is trading 55% lower at just 305and is
close to its average price in 2005, 2006 and 2007. More importantly, most
commodities remain well below their inflation adjusted highs of more than 30
years ago. With currency debasement and currency wars in the form of
quantitative easing and competitive currency devaluations set to continue,
oil, commodities and other tangible, finite markets may continue to rise in
price. This will likely leadto inflation - particularly in the food and
Complacency about the these inflation risks and risks
posed to the dollar and other fiat currencies remains widespread with
incorrect assumptions made. Those warning of the risk of inflation are many
of the same people who correctly warned about property bubbles and were
ignored leading to some the problems that we are experiencing today.
(PRNewswire) - JP Morgan Chase & Co. (NYSE: JPM) and
HSBC Securities Inc. (NYSE: HBC) face charges of manipulating the market for
silver futures and options in violation of federal commodities and
racketeering laws, according to a new lawsuit filed Tuesday in the U.S.
District Court for the Southern District of New York.
(Bloomberg) - Demand for 1-ounce Krugerrand gold coins
increased by 54 percent in the past month, the South African Gold Coin
Exchange said in an e-mail received today, without giving further figures.
(Reuters) Turkish gold imports rise to 9.07 tonnes in
October. Turkey's gold imports rose to 9.07 tonnes in October, compared with
2.45 tonnes the previous month, the Istanbul Gold Exchange said on Tuesday.
Turkey is the world's third-biggest gold consumer.
O'Byrne is the Managing Director of Goldcore, Ireland's Asset Diversification
and Wealth Preservation Specialist. He is regularly quoted and writes in the
financial media and was awarded Ireland’s prestigious Money Mate and
Investor Magazine Financial Analyst of 2006.
You can contact him by calling : the GoldCore
Bullion Services Team on
(Irl)+353 1 632
(UK)+44 203 086 9200
(US) +1 (302)635 1160