|
|
London Gold Market Report
THE PRICE OF GOLD held onto a $10 rise from the start of Asian
trade in London on Monday, priced around $1385 per ounce as Western stock
markets ignored fresh saber-rattling between North and South Korea.
The single currency Euro dropped to a 2-week low, pushing the gold price in
Euros up to an 8-session high of €33,900 per kilo.
"Gold buying emerged right from the start" of Asian trade says one
Hong Kong dealer, citing the stand-off over South Korea's military exercises
on a disputed island near its border with the Stalinist North.
"Gold, supported by its safe haven status, remained well bid through the
day," adds another dealer, while base metals and silver bullion fell
back with Chinese equities.
Copper futures traded in London then rose to hit new all-time highs.
"The reason we own the gold [in the Greenlight Capital fund] is because
we're worried about fiscal and monetary policies here in the United States
and throughout the developed world," said hedge-fund manager David
Einhorn to Bloomberg last week.
"If we saw a better level of monetary stability, then we very well would
sell our gold," says Einhorn, who replaced a position in New York's
securitized GLD gold ETF with physical bullion holdings – now worth
some $567 million – in spring 2009.
"The problem is, I really haven't seen anyone take a single step in that
direction."
New data, released by US regulators after Friday's close, showed that
speculators in New York gold futures and options last week cut their net
bullish betting by 2.5%.
So-called "Large Non-Commercial" traders cut their net position (of
bullish minus bearish bets, as a group) to a 3-week low equivalent to 751
tonnes of gold.
Gold held in trust for securitized gold ETFs, in contrast, meantime rose to a
record according data compiled by UBS Bank strategist Edel Tully.
"It's been quite a while since ETF and coin demand both increased at the
same time," she adds, noting a pick-up in European gold coin buying.
"While one day of positive data does not suggest this tide is turning,
we'll be keeping a close watch on the underlining appetite."
The world's largest exchange traded gold fund – the New York, Tokyo,
Hong Kong and Singapore-listed SPDR Gold Trust – added 15 tonnes to its
holdings on Friday, the largest one-day addition since the height of the
Greek deficit crisis in May.
Rising almost 1.2% by weight, the SPDR Gold fund's holdings grew to a 2-month
high of 1299 tonnes, worth some $57.8 billion at this morning's London Fix.
"They were very patient and they tapped a real deep need in the ordinary
investor to be able to buy and sell gold like a stock," reckons Wharton
finance professor Jeremy Siegel, speaking to Bloomberg News about the
mining-industry's World Gold Council, the prime mover behind the development
of gold ETFs six years ago.
Bloomberg quotes Siegel's research showing gold has risen 0.6% per yea after
inflation since 1802, while US equities have risen 6.6% and bonds 3.6%.
Saying that gold's value is decided by "fears of inflation or financial
collapse...if you can judge how investors will evaluate those fears, you will
do well," Siegel tells the newswire.
"The new, new, new normal is for the US to be looking in pretty good
shape," reckons Goldman Sachs Asset Management's chairman Jim
O’Neill, downplaying relative growth prospects in emerging economies
such as those he helped popularize 5 years ago by grouping together Brazil,
Russia, India and China with the "BRICS" label.
"The US will continue to outperform the rest of the developed world
[and] probably do pretty well versus most emerging markets as well,"
agrees Robert Doll, chief equity strategist at the $3.4 trillion Blackrock
Inc., forecasting a level of 1350 on the S&P500 index by Dec. 2011.
Last crossing below the gold price in Dollars in late April, the S&P
index had previously traded above it for 19 years running.
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.
|
|
