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Gold
Gold and silver are higher again this morning with gold
hitting new record nominal highs and silver having risen sharply to
$20.995/oz which is a new multi-month high. A close above $21/oz will be
important technically and a close above $21.24/oz would be very bullish
technically with long term chart analysts looking at the 1980 record high
(just below $50/oz) and the silver's record quarterly high close of $32.20/oz
as the next levels of technical resistance.
Gold is currently trading at $1,278.60/oz, €978.64 /oz,
£816.66/oz.
While gold has risen to new record highs, sentiment remains
lukewarm amongst the investment public with much of the mainstream press
barely covering gold's new all time record highs. Skepticism remains high
with many market participants expecting a pullback here and indeed one is
quite likely at $1,300/oz. However, gold could surprise to the upside and
surprise the consensus opinion as it has a habit of doing.
Despite some sensationalist headlines of gold
"surging" and of a new "gold rush", gold's rise has been
gradual and it is only up some 3% this week and some 3% this month. Gold is
only up 16.5% year to date which corresponds with its average annual
appreciation in the last 10 years. It is worth remembering that in the gold
bull market of the 1970s when gold rose 24 fold - or by 2,300% - in 9 years.
Gold rose 49.7% in 1972, 73.5% in 1973 and by 60.1% in 1974. In the final
phase of the bull market in 1979, gold surged 140% in one year. Gold's recent
rise has been tame and gradual by comparison.
Another indication of the lack of animal spirits or irrational
exuberance in the gold market is the recent decline in investor buying of
gold (and silver) coins. This is clearly seen in the low bullion coin
premiums which have fallen dramatically since late 2008 (see chart below). In
the aftermath of the Lehman Brothers collapse and the ensuing crisis,
premiums surged as investors and savers scrambled to buy bullion coins
leading to rationing and shortages. There is nothing like that happening in
the bullion markets today.
This apathy or lack of mania in the gold market is confirmed
by our sales desk who are less busy now than they were in the aftermath of
the Bear Stearns and Lehmans collapse and panics. Indeed, despite our
extensive international media coverage this week inquiries and sales have
remained steady but there is no element of the public "piling into"
gold. Indeed, much of the buying is being done by existing clients,
particularly wealthier clients adding to positions. This lack of bullishness
is confirmed by official government mint bullion coin sales figures. Muenze
Oesterreich AG, the Austrian mint that makes the Philharmonic coin, said gold
coin and bar sales were 1.003 million ounces in the year through August, down
39 percent from same period last year. Demand declined from 1.637 million
ounces in the eight months through August 2009.
Silver
Silver is currently trading at $20.83/oz, €15.95/oz and
£13.33/oz.
Platinum Group Metals
Platinum is trading at $1,618.25/oz, palladium is at $546/oz
and rhodium is at $2,050/oz.
Mark O’Byrne
Goldcore
Mark O'Byrne
is the Managing Director of Goldcore, Ireland's Asset Diversification and
Wealth Preservation Specialist. He is regularly quoted and writes in the
financial media and was awarded Ireland’s prestigious Money Mate and
Investor Magazine Financial Analyst of 2006.
You can contact him by calling : the GoldCore
Bullion Services Team on
(Irl)+353 1 632
5010
(UK)+44 203 086 9200
(US) +1 (302)635 1160
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