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Gold is higher against most currencies
and especially the euro. Gold is trading at USD 1,792.50, EUR 1,245.10, GBP
1,098.30, CHF 1,471.50 and JPY 137,624 per ounce.
Gold’s London AM fix this morning
was USD 1,791.00, EUR 1,243.49, GBP 1,097.56 per
ounce. Gold fixed marginally higher than last Friday’s AM Fix which was
at USD 1,787.00, EUR 1237.10, GBP 1,094.17 per ounce
which suggests physical demand is supportive at the $1,800 level.
Cross Currency Table
Asian equities rose again today but
China’s stock markets were again lower on concerns about the Chinese
and global economy. Initial gains in Europe have turned to weakness but the
FTSE is higher as it plays catch up after being closed yesterday.
The mooted German proposal to use
periphery nations’ gold reserves as collateral was back on the agenda
in Germany yesterday.
The Irish Times reports that in an
interview with Der Spiegel in Berlin, influential senior minister Dr.
Von der Leyen called for a guarantee system to
secure loans issued until the permanent rescue fund ESM, with its inbuilt
guarantee mechanisms, comes into effect in 2013. “The task of my
generation is to create a united Europe. The problem is that, after the
introduction of the euro, we simply stood still,” she said.
“For the labour
minister, an ad-hoc collateral system on gold reserves or state assets would
discipline national governments and prevent the current bailout regime going
the way of the stability pact.”
Fastest Money Supply Growth in 52 Years Supports Gold's
Surge
The United States M2 money supply
accelerated 2.2% in July from the prior month, the fastest pace in 52 years,
and grew 8.2% yoy, the highest reading in 23
months. The correlation between total U.S. M2 and gold has held above 0.90 since November 2004, as currency debasement
creates safe haven buying for the precious metal.
At the moment Asians seem more worried
regarding inflation but this sort of money supply growth is likely to lead to
inflation in the U.S and much of the western world.
Premiums for physical bullion in Asia
remain high showing continuing strong demand.
Indian premiums were strong again
yesterday as were those in Vietnam and Shanghai.
Reuters reports that Hong Kong dealers
quoted premiums for gold bars as high as $1.50 an ounce to spot London
prices, from $1.20 last week. Bullion markets were closed in Singapore,
Indonesia and Malaysia for the Muslim Eid al-Fitr festival.
Physical dealers in Tokyo saw selling
from local investors, but they also noted buying interest from China, where
demand for jewelry increases during the mid-autumn festival in September.
Journalist John Brimelow,
who publishes the JBGJ, reports in Lemetropolecafe.com that according to the
Shanghai Gold Exchange website a “substantial proportion” of the
trade there is for delivery. “This is not just a paper
phenomenon.”
Brimelow said that
“bearing in mind the huge gold importing by China in the latter part of
last year, in JBGJ’s opinion this is currently the key issue in the
gold market.”
The UBS daily note reports that
“the mood among gold investors appears to be to buy the dip rather than
chase the market, which is understandable given last week's
volatility.”
UBS conclude that the “violent
sell-off hasn't done any lasting damage to gold, and the reasons investors
bought gold in recent months remain valid. Our one-month forecast of $1950
remains in place.”
UBS three month price view is $2,100 per
ounce.
Very significant demand being seen for
bullion internationally and especially in Asia means that gold’s
correction is likely to again be of short duration. Indeed, the scale of
demand suggests that gold may not need a long period of consolidation and
could again surprise to the upside.
Non gold experts, many in the financial
services industry, continue to warn of a bubble. Their analysis is extremely
simplistic and almost exclusively based on recent price action.
However, the majority of those in the
industry and the majority of gold market analysts remain bullish.
Throughout August, prior to the recent
record nominal high and subsequent selloff, many banks raised their forecasts
for the year.
SocGen raised its
average gold price forecast to $1,950 an ounce for the fourth quarter of 2011
and to an average of $2,275 per ounce in 2012.
Bank of America-Merrill Lynch said in a
research note it was revising its 12-month gold target to $2,000 an ounce.
JPMorgan said that gold could reach over
$2,500 per ounce prior to year end.
The recent sell off has not seen banks
and analysts revise down their price forecasts.
GoldCore has said
since 2003 that the real high of $2,500 per ounce (inflation adjusted and
based on CPI) would likely have to be reached prior to gold being a bubble.
Those informed about the gold market know
that absolutely nothing has changed about the supply and demand dynamics
driving the gold market.
For the latest news and commentary on
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SILVER
Silver is trading at $40.90/oz,
€28.38/oz and £25.05/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,829.50/oz, palladium at
$762/oz and rhodium at $1,800/oz.
NEWS
(Wall Street Journal)
Gold buoyed by uncertainty ahead of Fed minutes
(Reuters)
Gold inches up after 2-percent fall
(San Francisco Chronicle)
Gold Rebounds as Steep Declines Seen as Excessive Amid
Debt Woes
(Bloomberg)
Gold Sales in India May Increase 25% During Festival
Season, Jeweler Says
(Reuters)
India gold seen gaining on bargain buying
COMMENTARY
(CNBC)
Gold 2011 - Special Report - Asian Consumers Driving Demand For Gold
(Resource Investor)
Gold, Politics, and Venezuela
(GoldSeek)
The Many Collapses of Keynesianism
(ZeroHedge)
Compare And Contrast To The Great Depression: In Three
Parts
(The Guardian)
Currency war feared if nations move to defend industry
(King World News)
Embry - Incredible Physical Gold Demand, Premiums
Exploding
Mark O’Byrne
Goldcore
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