Today's AM fix was USD 1,583.00, EUR 1,291.30, and GBP
1,007.83 per ounce.
Yesterday’s AM fix was USD 1,580.00, EUR 1,287.06 and GBP 1,009.33 per
Silver is trading at $27.07/oz,
€22.22/oz and £17.32/oz. Platinum is
trading at $1,418.25/oz, palladium at $577.80/oz and rhodium at $1,190/oz.
Gold rose $3.70 or 0.23% in
New York yesterday and closed at $1,581.00/oz. It rose as high as $1,590/oz prior to determined selling which saw gold fall. Gold
ticked higher in Asia prior to falling soon after the European open.
Gold has been trading in a range between $1,530/oz and $1,630/oz for nearly 2
months despite the Eurozone debt crisis entering its 3rd year and looking set
to escalate and despite signs that the US economy is on the verge of a sharp
These two factors alone mean that gold will likely
resume its upward march due to continuing safe haven demand. The likelihood
of further QE from the Fed will be icing on the cake for gold and silver.
US data yesterday showed factory activity shrunk in
July for a 3rd consecutive month and the jobless claims rose last week.
Those who continue to put “lipstick on the
pig” that is the US economy are lulling themselves and other
unfortunates into another false sense of security.
“Blue skies thinking” regarding individual economies
and the global economy got us into this mess and it will not get us out.
The World Gold Council have just published their
commentary on gold’s price performance in various currencies, its
volatility statistics and correlation to other assets in the quarter -
Gold Q2, 2012 - Investment Statistics and
It provides macroeconomic context to the investment
statistics published at the end of each quarter and highlights emerging
themes relevant to gold’s future development.
One of their key findings is that gold will act as
hedge against possible coming dollar weakness and gold will act as a
"currency hedge in the international monetary system."
Key findings of the World Gold Council’s report:
Review: Key Macroeconomic Themes During Q2 2012
Gold prices declined in most currencies during the second quarter with the
exception of the euro, Swiss franc and Indian rupee, in part due to a strong US
dollar. Despite a 3.8% decline in Q2 to US$1,598.50/oz
on the London PM fix, gold was up 4.4% during the first half of the year.
Volatility remained elevated amidst a busy event-risk period. However, gold
generally outperformed risk assets.
Global inflation eases but underlying trends supportive
for gold: A substantial drop in energy and some agricultural commodities
during the period has eased inflation pressures in many parts of the world
and put downward pressure on gold prices.
Reassessing “risk-free” assets: Even assets
traditionally considered safe are under pressure. German Bunds interest rates
climbed in June. The Swiss franc, yen and US Treasuries are also facing
issues – challenging their role as assets of last resort. Despite pressures
on the price of gold, its lack of credit risk, its liquidity and hedging
characteristics has made gold an attractive vehicle for long-term wealth
Correlation between gold and risk assets approaches
long-term averages: Gold’s correlation to equities and other risk
assets fell towards long-run average levels in Q2 helping portfolio
diversification. Gold’s increased correlation to equities in Q1 was an
indirect effect related to a weaker global economy coupled with a stronger US
Outlook: Emerging Macroeconomic Themes In H2 2012
Deflationary concerns in some countries provide room for further fiscal and
monetary stimulus. This may lead to a further debasement of currencies
through unconventional monetary policy and an increased risk of future
inflation. These factors should provide support for future gold investment.
The underlying structural issues that affect the euro
zone remain unresolved, despite advances in the formation of more
comprehensive burden-sharing mechanisms. In such an environment of
uncertainty and higher market volatility, gold will continue to be an asset
that investors use to diversify risk and preserve capital.
The flight to the US dollar as a safe-haven in the
first half of 2012 could be reversed. The US debt ceiling debate in Q3 and
federal elections in November, followed by the necessity to confront a
US$1.3tn budget deficit will prove challenging to the US dollar. With most
currencies under pressure in one form or another, gold is likely to provide a
hedging mechanism for investors
Cross Currency Table – (Bloomberg)
Dr. Constantin Gurdgiev, a non Executive member of
the GoldCore Investment Committee,
has analysed the Q2, 2012 World Gold Council data
and has written a blog post that can be read here or see commentary.
He finds that the report is worth a read as it shows
how gold generally outperformed risk assets and helped portfolio
He warns that safe haven government debt markets have
all the hallmarks of “return-free risks” rather than
The World Gold Council’s ‘Quarterly
statistics commentary Q2 2012’ can be read here.
Dr Constantin Gurdgiev’s blog on the report including charts can
be read here.
(Bloomberg) -- China Plans to Start Interbank Gold Trading on Local Market
China is preparing to introduce an interbank gold-trading system, a move that
may enable domestic banks to treat the precious metal as a more liquid asset
and increase holdings.
The Shanghai Gold Exchange, the country’s biggest
spot market, has been working with the China Foreign Exchange Trade System
since the start of the year, Gu Wenshuo,
an exchange spokesman, said today. The original plan was for the new system
to be running at the end of August, Gu said by phone, adding that details are unavailable as
banks are giving feedback.
China has been the largest producer since 2007, and was
the biggest user after India last year. An interbank gold-trading system is
part of broader reforms that Beijing aims to introduce to make the financial
sector more market-driven, according to Jiang Shu,
a senior analyst at Industrial Bank Co. Ltd.
“China is already very important in terms of gold
production and consumption,” said Jeffrey Rhodes, global head of
precious metals in Dubai at INTL FCStone Inc., a
New York- based trading and brokerage firm. “If a new interbank market
really does flourish, it could put the Chinese market in the mainstream and
Spot gold was 0.2 percent higher at $1,584.65 an ounce
at 3:38 p.m. in Shanghai. The metal, which reached a record $1,921.15 in
September, has rallied for 11 years on emerging- market and investment
demand, as well as central-bank purchases.
Gold imports by mainland China from Hong Kong reached
314,810 kilograms in the first five months, compared with 39,607.4 kilograms
a year ago, according to Bloomberg calculations based on data from the Hong
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Gold steady on weak U.S. data; dollar weighs
Gold advances for second day - MarketWatch
Asia Stocks Drop With Oil on Global Growth Concern
as Euro Falls - Bloomberg
UK housing slump will deepen, warns IMF
– The Telegraph
Dr Gurdgiev: Q2 Report From
The World Gold Council – True Economics
China’s Coming Assault on the Western
Financial System – The Daily Reckoning
It's a fine line between gold manipulation and
intervention - Mineweb
GoldSeek Radio - Ron Paul: U.S. probably manipulates gold through ESF
World economy now effectively a multitrillion-dollar
game of chicken – Resource Clips
Ray Dalio's Bridgewater On
The "Self Re-Inforcing Global Decline"
– Zero Hedge