Posted on 01/12/2009 10:52:06 AM PST by An Old Man
Gold Sinks Through "Major Support" as Zero-Yielding Currencies Rise; Physical Trading Jumps on "Safe Haven" Bid - Monday 12th January 2009
Spot Gold prices sank Monday lunchtime in London, dropping $20 in 20 minutes to trade at $825 an ounce as world stock markets fell across the board.
Crude oil tumbled 5% to $38.85 per barrel, while government bond prices also dropped.
The zero-yielding US Dollar and Japanese Yen both rose yet again on the currency markets.
"Gold opened [Monday] at the 100-day moving average and is steadily ticking lower," says a technical note from Mitsui, the precious metals dealer, citing "major support at $830.
"With Japan out on holiday, Spot Gold and silver have been dominated by the Euro dropping below $1.34. It now looks likely to test support at $1.33."
The Gold Price in Euros still dropped 2.2% early Monday, however. Measured against the British Pound, wholesale gold traded 10% below last week's all-time record peak of £612 an ounce.
"Sterling surged last week despite a mounting tide of pessimism," notes Steven Barrow at Standard Bank in London.
"It rose despite another sharp cut in the base rate and some loose talk that the Bank of England could rent out Ben Bernanke’s helicopter to drop pounds on the unsuspecting British public."
How come? Because "with currency markets starved of liquidity, there may be a limited role for 'fundamentals' right now," Barrow suggests. "Currency markets are not functioning normally – a general problem at the moment."
Following a flood of poor economic data, the European Central Bank (ECB) is now expected to join the US, Japan, Switzerland and Britain in slashing its interest rates when it meets this Thursday.
"The ECB has a sad track record of always showing up late to the party," says one economist at ING. But Bank of America forecasts a drop from today's 2.5% target rate to 1.5% by end-March.
Deutsche Bank expects Euro rates of just 0.75% by end-June.
Back in the gold market, meantime, new data released after Friday's close showed the volume of betting on US Gold Futures and options grew yet again last week, rising to stand nearly 18% above mid-Dec.'s 30-month low.
B-b-but that guy on TV says........
WHAT DID I SAY?
MSM were pumping for buyers yesterday & day before
Seems to me that economics is not a mature science quite yet. No one really knows what's going on. Scary.
4later
“Gov’t is the only entity that can take a valuable commodity like paper and render it worthless, merely by applying ink” Ludwig Von Mises
Don’t let small changes in gold prices delude you into thinking the USD can remain strong for the long term. When the gov’t starts issuing the TRILLIONS of $ in bonds they will need to finance the deficit for this year and the ‘stimulus’ package, then we will see how strong the US $ is. Fear has chased investors to the ‘safety’ of US currency, but that will not last much longer. Only by virtue of being less bad off the Euro countries and Britain is our currency strong.
It won’t last long.
We are experiencing deflation at the moment. The Obamunists are planning actions that will soon turn this into a hyperinflationary mess.
Just as in the Great Depression, the money supply has crashed.
During the Great Depression, the money supply contracted by some 30%.
Right now it has done at least the same. How is it possible?
Credit markets have evaporated. Doubt that credit is money? Look in your wallet. That plastic did not exist during the last Depression. A lot of it is gone forever.
You cannot fix systemically broken credit markets, you need to replace that component of the money supply with real cash in a situation like this. The result will be hyperinflationary.
That will be just to plug the holes. Obama will desperately continue to try to spend his way to prosperity a la FDR. Won’t work.
Hopefully the dope will not last as long as FDR. An adoring press and public gave that buffoon 12 years of fumbling with misguided attempts to ‘cure’ the Great Depression and not once threw the bum out of office. His efforts were disastrous and why he should rightfully be known as the architect of the Great Depression.
Never did trust the gold prices because some man behind the curtain makes the rules.
The study of economics is interesting, but useless.
no, economy is science, its just theres lots of propaganda out there. The economist who got things wrong have alot of their wealth in stockmarket/real estate. they want everyone to buy again so they could get out
You cannot fix systemically broken credit markets, you need to replace that component of the money supply with real cash in a situation like this. The result will be hyperinflationary.
Assuming your scenario is correct, and I'm not disputing that it is, just how is "replacing that component of the money supply" even inflationary, let alone hyperinflationary? By your own terms, it's replacing "money" removed from circulation, not in addition to current "money" in circulation.
BTW, at what price should we look to re-enter the gold market? Or, should we avoid any buying at the present time? How can I buy spot gold as the market moves interday?
Never buy Gold on the advice of a man willing to sell you his.
Hummmm... You should have posted that earlier. I think I'm in trouble now. :<(
yeah, all b*llocks aside, msm often pumps a commodity for buyers just before a big sell.
That is called advertising. People pay lots of money to get their message out.
Everyday there are people who sell and people who buy. That is what makes the world go round and round.
Would you say that the whole world is going to go into hyperinflation at once? Who ends up on the top of that heap?
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