Gold Trades in Narrow Range Despite Supply Shortfalls

By: Mark_OByrne

After initial falls, gold has rallied in morning trade in London as the dollar has given up some of its recent sharp gains. Gold's rise comes despite the further  fall in oil prices but gold remains firmly in its recent narrow range between $780 and $840.

The disconnect between the leveraged futures market and the physical bullion market continues with many wholesalers and retailers finding it hard to source and supply bullion coins and bars in the U.S. and internationally. This is particularly the case with silver bullion coins and bars (all bars except 1000 ozt silver bars are becoming difficult to source) in the U.S. and with gold bars in Asia. Gold Investments is continuing to be able to supply our clientele with all their physical bullion needs without delays but only through an extensive network of wholesale suppliers internationally.

Reuters quotes a bullion dealer in Singapore. "Demand from our regular customers such as India, Indonesia and Thailand is still there. There's a shortage of physical bars in this region, which also helps support premiums."

Gold remains taboo in most financial and economic commentary
Much of the financial and business press still fails to grasp the magnitude of the current crisis and Pollyanna, delusional analysis remains the order of the day in large part. Gold and silver bullion remain the preserve of the smart money. This smart money which has been ahead of the curve and realised the extent of the problems facing the U.S. financial system and hence global economy, remains a tiny fraction of the international investment community.

Gold remains taboo in most of the financial and economic community – it is largely ignored and when it is occasionally covered it is often done so in an unbalanced and biased fashion by non experts who know little or nothing about the supply and demand fundamentals and the other very strong fundamentals driving the market. The media and investors remain obsessed with equity markets and wrongly assume that a one day stock market rally signifies some form of return to economic health.

Gold is the elephant  in the room and blurts out unpleasant truths about our current global financial and monetary system. Unpleasant truths that most commentators do not have the courage to face.

Many if not most investment “experts” and economists still regard gold as a “useless commodity” or a “speculative commodity” (akin to pork bellies) rather than the finite, safe haven currency it remains and will increasingly become in the coming recession or Depression.

The mainstream majority remains oblivious and  is still buying increasingly risky stocks including financial stocks as witnessed yesterday. Unfortunately, ignorance will not be bliss for the clueless and complacent as the global economic crisis continues to deepen and real wealth preservation again becomes of paramount importance.

Today's Data and Influence
Markets await US data on housing later today with the release of the National Association of Realtors Pending Home Sales for July. Economists expect a 1.0 percent decline compared with a 5.3 percent rise the previous month.

Gold and Silver
Gold is trading at $803.60/804.10 per ounce (1200 GMT).
Silver is trading at $12.09/12.15 per ounce (1200 GMT).

PGMs
Platinum is trading at $1296/1306 per ounce (1200 GMT).
Palladium is trading at $250/266 per ounce (1200 GMT).

By Mark O'Byrne, Executive Director

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

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