Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Gold's Big Fuss Over Nothing

IMG Auteur
Published : December 01st, 2012
656 words - Reading time : 1 - 2 minutes
( 2 votes, 4.5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...

 

 

 

 

How the gold price has gone nowhere – fast and aggressively – ahead of 2013...

WHAT A FUSS over nothing! Gold crept back Friday morning to right where it stood before last Friday's sudden 1.4% jump, trading at $1730 the ounce.

That meant it also unwound half of this week's sharp 2.0% plunge from Wednesday. It also puts the gold price in US Dollars right back where it stood a month ago. Which is also where gold stood 12 months ago, at the start of December last year.

And then it went and slumped $15 again, taking gold pretty much right back to its monthly average for November.

Hey-ho. Many people are surprised both by this volatility, and by the lack of action it actually leaves behind when the shouting is done. Because the long-term crisis in money has only grown worse this year, flattening Greece and squashing savers and retirees beneath the wheels of zero interest rates. And the looming fiscal cliff in the United States – followed immediately by a fresh "debt ceiling" row in Feb. 2013, plus urgent debt repayments for Spain and Italy all through next year – must surely be good for gold investing. Which leaves analysts scratching their heads.

The gold market is "nervous" says one today. It's becoming "increasingly confused" says another, mistaking his own confusion for the millions of savers, investors and traders who make up the bid and offer in bullion.

Unlike the last 5 years, however, there has been no panic or crash in the broader financial markets in 2012. Indeed, stock markets globally have risen almost as well as gold since New Year.

That breaks a 7-year run of gold beating the US stock market hands down. Gold has only underperformed the S&P500 twice since 1999. It has risen 19.1% per year on average since 2004, versus the US stock market's 3.8% average rise.

Now, extending that run in 2013 might look a big ask. This year's return-to-date on gold – some 12.0% according to most data providers – is also flattered by end-2011's own volatility. (Contrast the
PM London Fix from Dec. 29 with the AM Fix on Dec. 30th.) But while the absence of an immediate panic this year has left gold little changed so far, the background rumble of crisis and monetary stress has grown louder. Because the bald fact, like the gold price, remains unchanged too. The fact that countries which cannot repay their debts have only two options – either default or devalue.

The developed world is pushing ahead with trying to inflate away its obligations. This week Greece was given leave by its lenders to start writing off 20% of its debt. Yet if you're looking for an over-extended bull market, look no further than government debt.

Buying US Treasury bonds has delivered negative returns in
only 4 of the last 31 years. That relentless rise has taken down interest rates worldwide. Because bond payments are a fixed sum, whereas the interest they pay shows that sum as a percentage of their market price. So the higher the price, the lower the interest rate. Now they stand next-to-zero.

Unless interest rates go negative – as a small band of central-bank policy wonks would like – then bond prices really can't rise much further again. Gold of course already pays nothing in interest. It's been way ahead of the curve during this depression so far. It remains uninflatable and undefaultable as 2013 beckons. No one's to print, and no one's to destroy, gold is still the opposite of debt.



Adrian Ash



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.

 

 

Data and Statistics for these countries : Greece | Italy | Spain | All
Gold and Silver Prices for these countries : Greece | Italy | Spain | All
<< Previous article
Rate : Average note :4.5 (2 votes)
>> Next article
Adrian Ash is head of research at BullionVault.com, the fastest growing gold bullion service online. Formerly head of editorial at Fleet Street Publications Ltd – the UK's leading publishers of investment advice for private investors – he is also City correspondent for The Daily Reckoning in London, and a regular contributor to MoneyWeek magazine.
WebsiteSubscribe to his services
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Debate Over Electric Trucks: Let’s Get It On
25 AprJerry82
Thanks Mish, this was a very insightful and thought provoking piece. I've often heard concerns about the weight of these new electric trucks and th...
No, The Junior Mining Stocks Are Not About To Implode - Dave Kranzler
25 AprJerry821
Thank you Dave for this excellent article. I agree with your well thought out critiques that point to junior miners being just fine. Relying on tha...
Gold Bullion Erases $10 Bounce Despite French Election, N.Korea Ris...
25 AprJerry82
I don't know how much I'd trust the listed GLD holdings. I always found GLD's structure to be a bit strange. They so famously claim that they are 1...
The Story of Gold Money, Past, Present and Future, by Edwin Walter ...
18 AprJerry82
Thank you for this very thought provoking piece Nathan. I have not read any literature from Edwin Walter Kemmerer before but I am inclined to pick ...
Gold Prices Slip $10 After Breaking Downtrend as UK's May Seeks Bre...
18 AprSam Maher3
"That left the GLD gold ETF needing a 2017 high of 849 tonnes in bullion backing." I frequently see you make these claims on GLD's holding...
Bombs Away!
17 Aprprljr-1
James tribe owns trump.
Krunch Time for Korean Krackpot Despot, Kim Jong-Un: Missile Crisis...
17 Aprprljr1
Unfortunately the world is not run by Christians, well except for the useful idiot ones.
Krunch Time for Korean Krackpot Despot, Kim Jong-Un: Missile Crisis...
15 Aprkevthorne1
I read from this that it is the USA that is 'a threat to the entire world'. How many times have we heard this - 'country X is a threat to the w...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS