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London Gold Market Report
THE PRICE OF GOLD jumped to a new all-time high of $1489
per ounce in Asian trade Monday, slipping back as the Dollar then rose vs.
the Euro despite Greek protestations that Athens isn't seeking a
"restructuring", in which it would effectively default on a portion
of its debt.
Major-economy government debt rose in price, but Greek bonds sank –
pushing yields to fresh post-Euro highs – while global stock markets
began the Easter-shortened week with a 0.5% drop.
The
gold price for Eurozone buyers rose to a 5-week
high as the single currency fell on the forex
market. UK investors wanting to buy gold today saw it re-touch Friday's new
2011 highs at £913 per ounce.
Crude oil meantime extended last week's 2.8% drop, after Saudi oil minister
Ali al-Naimi said the global market "is
oversupplied".
Silver bullion in London's wholesale market touched a fresh 31-year high
before slipping below last week's close at $43 per ounce.
"Fear of inflation...the high oil price...extreme financial difficulties
[for some] Eurozone nations...the US
debt-crisis...problems in the Arab world...and the situation in Japan...There
are more than sufficient reasons why the gold price further extended its
gains to a new all-time high," writes Wolfgang Wrzesniok-Rossbach
in his latest Precious Metals Weekly at German refining group Heraeus.
"The moderate interest-rate hike in Europe has not had the ability to
change the trend, nor has the relatively restrained demand for bars and
coins, observed not only in Germany but also in Asia."
A second Eurozone rate hike in May would be a
"mistake" said European Central Bank policy-maker Adam Glapinski, head of Poland's central bank, today.
"We'd simply be joining the senseless panic about...inflation. I'll vote
against it."
"We need to balance doctrine with pragmatism," said fellow ECB
voting member Michael Bonello, chief at the Central
Bank of Malta, in an interview on Friday.
"We must be careful not to make it more difficult for countries to grow
out of their debt problem."
Speaking early on Monday to CNBC in Hong Kong, "I believe the best
currency is gold and silver, but most people still think gold and silver are
speculative investments," said Swiss money manager and Asia-based
investment author Marc Faber.
"There's a huge overhang of US Dollars globally. If people could sell
those Dollars for something they believed in, they would do it. [People]
should be their own central banks and gradually accumulate gold reserves as a
currency."
As a group, institutional investors slashed their leveraged betting on both
the gold and silver price last week, data compiled by London consultancy the
VM Group show. But exchange-traded trust funds in gold (Gold ETFs) saw their
holdings rise, capping a 3-week run of redemptions.
Exchange-traded silver investment fell across the board, but "despite
total global investment sinking by more than 30 million ounces," says
VM, "silver went on to hit" a series of new three-decade highs.
"It remains investors who have been pushing the silver price up,"
says Heraeus' Wrzesniok-Rossbach,
"which in our opinion makes the metal that more and more vulnerable for
large setbacks.
"Even the only tangible argument about growing industrial demand does
not justify the present price level in our view. [But] it would be too early
to speak of an end of the silver rally. For there is perhaps still too much
cheap money in the financial markets...looking for lucrative investments."
Beijing yesterday raised banking reserve ratios for the fourth time this
year, requiring lenders in China – the world's second-hungriest gold
investment market – to keep 20.5% of their cash reserves at the central
bank in a bid to curb credit growth, a national real estate boom, and
consumer price inflation now running at a 30-month high.
"A few emerging markets are running tightly managed currency
regimes," said US Treasury secretary Tim Geithner
at this weekend's meeting of the International Monetary Fund in Washington,
clearly referring to China's continued 'Dollar-peg' strategy for keeping its
exports competitive via the exchange rate.
"[That] system of exchange rates is an obstacle to effective
international co-operation on [trade] imbalances," Geithner
claimed.
Adrian Ash
Head of
Research
Bullionvault.com
You can also Receive your first gram of Gold free by opening an
account with Bullion Vault : Click here.
City correspondent for The Daily Reckoning in London, Adrian Ash is
head of research at BullionVault.com – giving you direct access to investment
gold, vaulted in Zurich, on $3 spreads and 0.8% dealing fees.
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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