Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19
Central Banks’ Gold Buying and Repatriation Spree - 28th Nov 19
Another Precious Metals’ Reversal Coming Right Up! - 28th Nov 19
Stock Market 100% Measured Moves May Signal A Top - 28th Nov 19
Don’t Look for Investing Advice in the Media - 28th Nov 19
Why You Should Buy Trailer Park Stocks - 28th Nov 19
Will YouGov General Election Forecast 2019 be as Wrong as their REAL Forecast was for 2017? - 28th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Gold "Attractive" as US Bonds Signal Inflation 2011

Commodities / Gold and Silver 2011 Jan 13, 2011 - 08:07 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD reversed an early 0.8% dip to trade above $1387 per ounce on Thursday in London, as the Dollar slipped following a surprise jump in new US jobless claims.

Crude oil ticked lower from Wedneday's new two-year high, but silver prices also rallied after giving back half of this week's 4.1% gain vs. the Dollar, turning higher from $29.16 per ounce.



Overall, European stock markets were flat as the Pound and Euro both rose following "no change" decisions from their central banks.

The gap between two-year and 30-year US Treasury bond yields meantime widened to record levels – showing "that inflation expectations are rising" according to RBC fixed-income strategist Peter Schaffrik – as bond traders awaited today's sale of $13 billion in new US debt.

"2011 is shaping up as a race to the bottom for currency values," writes Harvard professor Kenneth Rogoff in today's Financial Times.

"No wonder gold has been so attractive."

Calling Eurozone economic policy "so incoherent...it is hard to know where to begin," Rogoff says the Euro is likely "to succeed in hugely underperforming" other currencies this year, because the citizens of Greece, Ireland, Portugal and Spain "cannot be asked to suffer recession indefinitely so that foreign creditors can be repaid."

The Bank of England and European Central Bank both voted today to keep their key interest rates on hold at record-low levels.

South Korea's central raised its lending rate to 2.25%, however, saying that Asia's fourth largest economy will continue to grow "even in the presence of external risks".

After the Swiss National Bank said last week that it no longer accepts Portuguese government bonds as collateral for lending to banks, research by the FT's Money Supply blog today showed the Bank of England refusing only Greek government debt.

"We grew by twice the European Union average," noted Germany's economic minister Rainer Bruederle on Wednesday, after new figures said the Eurozone's largest economy grew by 3.6% in 2010.

German wholesale prices jumped 1.8% last month from Nov., new data showed Thursday, rising more than 9% on average from a year earlier.

The gold price in Euros today reversed the last week's 2.2% gain, however, retreating below €33,700 per kilo after Spain and Italy successfully sold €9 billion of new government debt between them, albeit it at sharply higher interest rates from their previous bond auctions.

"Yesterday's successful Portuguese bond issuance has stalled the recent rally in precious metals, as risk aversion eases and safe-haven demand dissipates," writes Leon Westgate at Standard Bank.

"Profit taking – exacerbated by reduced risk aversion – [also] prompted a strong sell-off of silver...Lower prices however might entice physical buyers placing a floor on silver's fall."

"It seems hard to avoid the conclusion that higher global food prices, higher emerging market inflation, and weak developed-market currencies won’t create some sort of increase in inflation," says Westgate's colleague at Standard Bank, chief currency strategist Steven Barrow.

"This scenario is best revealed by the Bank of England’s predicament. For here it seems that stagflation is the biggest threat, not deflation."

British savers looking to start gold investing today saw the price slip to new 5-week lows at £874 per ounce after Sterling rose following the strongest UK manufacturing-growth data in 15 years.

The Bank of England meantime kept its key interest-rate unchanged, holding the cost of short-term bank finance at an all-time low of 0.5% for the 22nd month in a row.

Allowing for inflation – and with Bank of England rates held again at 0.5% today – real UK interest rates have fallen over the last year to their lowest level since 1978, averaging 4.2% below the pace of retail-price rises.

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

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 2011

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.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules