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Weekly Markets
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Precious Metals - HSBC,
Barclays Capital & UBS.
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Gold is Undervalued.
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Oil - Oil surge
continues
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Other
Commodities - Marc Faber & John Myers
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Currencies - USD & EUR
verses Asian Currencies
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Bonds - New Record US
Current Account Deficit
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Stocks - Broad market
rallies
Weekly Commentary
Gold & Silver Investments Limited on CNBC Europe
Opinions
The Economist, Robert Novak, New York Times, Sunday Tribune & Sunday
Times
Performance (% Change)
"The Euro price of oil is up nearly 30% in 4
weeks"
Weekly Markets
Stock markets were up for the week.
Bond markets were volatile but largely flat.
Gold continued it's rally in all currencies. Oil and
the majority of commodities were up.
Precious Metals
Gold was up $10.80 or 2.53% for the week. From
$426.90 to $437.70 per ounce.
Silver was up from $7.27 to $7.31 per ounce or 0.83%
for the week. Silver is up 6 weeks out of the last 7.
Platinum (July) was up nearly 2%; from $874 to $891
per ounce.
Gold extended its gains to make new 7 week highs and
ended Friday's session higher by $2 to $437.70.
Gold for August delivery reached as high as $441.30.
For the week, gold is higher by $10.80 or 2.53% for
its 4th straight week of gains and silver is higher by $0.06 or 0.83% to give
it its 6th winning week in 7.
Euro gold again traded near all-time highs Friday,
trading over EUR360 at one point.
Gold is below it's long term average and is
undervalued
Gold has been trading between $340 and $455 or
EUR300 and EUR362 per ounce for the last year.
The following figures put the current price of gold
in historical perspective:
From 1979 to 1999, the Average Annual Low for the price of gold was $340 per
ounce.
From 1979 to 1999, the Average Annual price of gold was $386 per ounce.
From 1979 to 1999, the Average Annual High for the price of gold was $455 per
ounce.
In 15 out of the last 20 years, gold exceeded $400 per ounce.
The price of gold is actually trading at less than
half of its all-time high of $890 in 1980 and around one quarter of it's all time high of $1,590, adjusted for the significant
inflation of the last 24 years.
Recent developments in the currency and gold markets
have provoked some serious thinking and even reevaluations
among professional gold commentators. In an interesting note HSBC said during
the week that "had gold continued to act as a slave to the currency
markets, the gold price should have fallen to around USD390/oz, given the
ongoing strength of the dollar . . . gold has also outperformed most other
major currencies, suggesting the recent strength is not just a rejection of
the dollar and the euro, but is perhaps the
beginnings of a more sustained independence from the currency markets. Specifically,
- In Swiss Francs, yesterday’s high of
CHF548/oz was the highest level since April 1994.
- In Japanese Yen the overnight high of Y1,506/g was
the highest level since August 1992.
- In Sterling
the high of £238/oz was just £3/oz off the nine year high of
£241/oz seen in September 2003.
Barclays Capital which has long subscribed to the
slightly dubious notion that upward movements in the gold price were purely
to do with dollar weakness and Euro strength and thus the movement of the
price of the Euro and the gold price were massively correlated is also
reassessing previous assumptions:
"The commodity that has gathered the most media
coverage from its break from dependency from the euro-dollar
exchange range has been gold. Gold continues to see the most attention with
many getting excited by the gains being seen in euro
gold which yesterday pushed briefly above EUR356 before softening back
towards EUR354. Despite this trade becoming "flavour of the month",
there appears to be heavy resistance between EUR350 and EUR360, partly due to
delta hedge selling. However, there does appear to be an increasing appetite
to test the EUR360 level and this has the potential to push US$ prices back
above $430".
"The euro/dollar
exchange has disconnected from gold in the last couple of weeks,'' said UBS
analyst John Reade.
The realisation that gold may continue moving up in
all currencies independent of US dollar weakness should provide strong
support beneath the market and lead to higher prices in all currencies.
Euro Gold EUR350 - Hamilton,
Zeal Intelligence, 20-06-05
Gold hits 6-week
high in Europe, funds buying - Reuters, 17-06-05
Gold Prices Climb
to Seven-Week High as Energy Costs Gain - Bloomberg, 17-06-05
M'sia To Convince More
OIC Countries To Use Gold Dinar - Malaysian
National News
Metals pushed
higher by renewed fund interest - CBS Market Watch,
16-06-05
COMEX gold,
silver climb on fund buying, PGMS rise - Reuters , 16-06-05
Gold mining in
worst crisis for the past 44 years - Finance 24, 15-06-05
Yawns greet
gold's euro move - Brimelow,
CBS Market Watch, 16-06-05
Gold- Euro
Correlation: The End of a Beautiful Friendship - Royal Bank of
Canada, 15-06-05
By :
Mark
O’Byrne
Gold.ie
Gold Investments will provide further information or
contact details on any of the options listed above to interested parties.
Questions and comments are welcome to mark.obyrne@gold.ie . Gold Investments do not
endorse any of the offshore bullion storage options listed (except for the
PMCP and VIA MAT) and investors should do their own due diligence on all
providers.
Mark O'Byrne is the Managing Director of Gold and Silver Investments Limited,
Ireland's
Asset Diversification and Wealth Preservation Specialist ( www.gold.ie ). 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.
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