Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22
What it's like at a Stocks Bear Market Bottom - 29th July 22
How to lock in a Guaranteed 9.6% return from Uncle Sam With I Bonds - 29th July 22
All You Need to Know About the Increase in Building Insurance Premiums for Flats - 29th July 22
The Challenges on the Horizon for UK Landlords - 29th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Will Set New Highs in 2011 on Low U.S. Interest Rates

Commodities / Gold and Silver 2011 Dec 16, 2010 - 08:05 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD in wholesale London dealing slipped back to an overnight low beneath $1380 per ounce Thursday lunchtime, trading 0.5% down for the week as world equities held flat and the US Dollar eased back on the forex market.

Commodity prices were little changed, with crude oil holding above $88 per barrel.


Silver bullion ticked back above $29 per ounce – a 30-year high when first breached four weeks ago.

"[The] recent soaring costs of such materials as silver" will force Japan's Fujifilm Corp. to raise its photographic film prices by 20% next month, it said this week.

Eastman Kodak Co. blamed falling profit margins on rising silver prices in Oct., while Tuesday this week saw medical-imagining firm Carestream Health Inc. hike its film prices by up to 25%.

"We don't make [Silver Price] predictions here, but I've seen people say there's another five years to go," says Michael DiRienzo, executive director of the Washington-based Silver Institute to New York state's Rochester Democrat & Chronicle.

Silver prices have risen 7-fold from a decade ago. Well over 50% of annual demand comes from industrial users. That compares with less than 15% in the gold market.

"We expect gold to enter another bullish year in 2011," says Swiss refinery MKS's finance division in a note, "as global economic uncertainties and inflation concerns will most probably boost" gold investment further.

"Every other currency could be at risk of losing...value."

Since 18 March 2009, "the day that the [US] Fed announced it would engage in a money printing campaign, the gold price has soared 60%," notes the VM Group consultancy in London today.

"The fact that it has not gone higher is simply a result of looming deflation, still the largest threat to the US economy," says VM in its monthly Precious Metals analysis for ABN Amro Bank.

"Gold will rise for the tenth consecutive year this year and probably in 2011 too, to break new records.

"Eurozone debt default is another cause of concern for wary investors, while Chinese gold investment demand is also growing strongly."

Today's Financial Times reports that "At Beijing's largest gold shop, the queues to buy bullion mini bars have turned into scrums as...Chinese investors, worried about inflation, want in on the trend."

European finance ministers meantime meet today in Brussels to discuss a "permanent" mechanism for weaker states to avoid the soaring borrowing costs and deficit crises which have hit Greece and Ireland this year.

German chancellor Angela Merkel again denied overnight that she has any intention of helping create pan-Eurozone sovereign bonds, to be used for financing government deficits jointly.

Spanish bond buyers today demanded a 13-year record high of 5.44% per year to fund a €1.7 billion auction of 10-year debt.

German and UK government debt prices also slipped further, but US Treasury bond prices rallied, nudging the 10-year yield back down to 3.49%.

"As long as real interest rates [after inflation] are low, gold should find buying support," says Walter de Wet at Standard Bank today, noting that – even as 10-year US Treasury bonds have jumped to 3.5% – inflation rates implied by bond-market prices has also jumped to a 7-month high at 2.3%.

"This leaves the 10-year real interest rate still at a very low 1.2%."

"Despite the savagery of the recent rise in yields, again let’s put this into some sort of longerterm, bull market context," says Societe Generale strategist Albert Edwards.

"[Ten-year US] yields would have to rise above 4.25% before the bond bull market [starting in 1981] was to be seriously challenged."

As for the equity market, says Edwards, "The notion that we are in a sustainable economic recovery is as ludicrous as it was in 2005-2007. But investors are back on the dance floor, waltzing their way towards the next, inevitable implosion."

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 2010

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