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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold the Investment of the Decade

Commodities / Gold & Silver 2009 Dec 31, 2009 - 06:51 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD rose sharply into the close of 2009 in short London trading on Thursday, adding 1.8% from Wednesday's one-week low as the US Dollar fell on the currency market and global equities ticked higher.


Ending the year with a London Gold Fix of $1104 per ounce, the price of gold in Dollars averaged more than $972 in 2009, adding 11.4% from the 2008 average and rising almost 27% from last New Year's Eve.

Eurozone gold buyers saw the price rise 23% in 2009 from New Year's Eve 2008.

For UK investors choosing to buy gold this year, the average daily price of gold rose 31.5% to £621 an ounce. Year-on-year, it gained 14.7%.

London's FTSE100 share index rose 21.8% this year, but the gold price delivered average annual gains this decade of 15.1%, while the Footsie dropped more than one-fifth of its value from the record high of Millennium Eve.

US stocks as measured by the S&P 500 index have lost 23% from this time 10 years ago. The gold price in Dollars has averaged annual gains of 14.9%, gaining more than 280% from the end of 1999.

"As we move into 2010 it will be interesting to see how the precious metal picture unfolds," says Japanese dealer Mitsui in a note from its London office.

"Investors are expected to jump back on the gold bandwagon in the New Year, after profit-taking and a US Dollar rally have brought the yellow metal back to levels that seem a relative bargain."

Thursday saw the US Dollar fall hard on the forex market, losing more than 3¢ to the British Pound and trading at worse than $1.44 to the European Euro – launched 10 years ago – little changed from the end of 2008.

US government bonds fell as the Dollar slipped, driving the yield offered by 10-year Treasuries up to 3.79%. That compares with a 10-year yield on New Year's Eve '08 of 2.25% and the close of 1999 at 6.45%.

Crude oil meantime crept higher towards $80 per barrel – reversing well over two-thirds of 2008's post-Lehman Bros. losses. Base metals led by copper and zinc ended 2009 at new 15-month highs. White sugar completed its biggest annual rise in more than two decades according to Bloomberg data.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

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.

Adrian Ash Archive

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