Gold
Gold surged a further $10.00 to $830.70 in New York yesterday. Silver surged to over $16 which is its highest level since 1981 and a 26 year high prior to falling but it remained up 5 cents on the day at $15.29. Gold has traded sideways in Asian and European trading and is trading at $832.50 at 1300 GMT.
After the recent surge in euro and British pounds, gold has sold off from yesterday's new record highs and is trading at £395.20 GBP (down from £402.20 ) and €568 EUR (down from €575).
Oil induced inflation, dollar and credit crisis risks are likely to keep the gold price at elevated levels in the coming months. Risk aversion is definitely rising and further diversification into safer asset classes is inevitable. We are seeing unprecedented demand and a marked increase in both the volume and size of orders. Where before intial inquiries would result in receiving payment in days, recently investors want into the market as soon as possible and payment is being received same day.
The FT reports that the surge in oil prices is leading to fears of global inflation. "U.S. stocks tumbled on Wednesday as the dollar hit record lows and mounting mortgage losses raised fears that credit turmoil could damage economic growth. The combination of events left investors worried about whether the Federal Reserve would be able to cut rates in response to the credit turmoil without further weakening the dollar or igniting inflation and pushing oil prices even higher."
Lex in the FT considers the possibility of oil at $100 and gold at $1,000. "Even for the most cold-blooded investor in modern financial markets, round numbers retain a primal fascination, notes Lex. So what to make of three big round numbers already out there or in the offing? Oil is nudging $100 a barrel. Goldbugs enthuse that $1,000 an ounce for the metal is not too far off. PetroChina has become the first company to hit a market cap of $1,000bn. This parade of ones and zeros does not appear to add up to much - the supply/demand picture for oil is little changed since $75 a barrel; dollar weakness and inflation fears have helped push gold higher; and PetroChina’s feat is entirely technical. But it is not wise to dismiss entirely the significance of these milestones as superstition. The factors behind these moves - a slowing U.S. economy, rising inflation risks, scarce oil and a massive, if isolated, stock market bubble - are serious concerns. Sometimes the focus on big numbers itself betrays real underlying anxieties."
Gold at $1,000 is extremely likely in the coming months. The long term average of gold to oil is 15 or historically, on average one ounce of gold can buy 15 barrels of oil. Today oil is at $97 per barrel and that multipiled by the average of 15 would result in gold at $1,455 (97 X 15).
"There is a flood of money coming into gold at the moment. You can't really stand in the way. There are hundreds of things that are supporting the market," said Jeremy East, global head of metals trading at Standard Chartered Bank.
Forex and Gold
The dollar has rallied somewhat overnight and this morning but remains near record lows versus the euro at 1.466 and at 2.1058 versus sterling.
The Telegraph in the UK warns of a global currency crisis and quotes Hans Redeker, currency chief at BNP Paribas: "We're seeing a loss of confidence in all paper currencies, but above all in the dollar."
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/07/bcngold107.xml
http://www.telegraph.co.uk/money/main.jhtml;jsessionid=V3TQOP1R3VY03QFIQMFSFFOAVCBQ0IV0?xml=/money/2007/11/08/cnsarko108.xml
Silver
Silver surged yesterday and then retraced its gains. It is likely to challenge at least $20 prior to year end and will likely outperform most other commodities in the medium and long term.
http://quotes.ino.com/chart/?s=FOREX_XAGUSDO&v=dmax
PGMs
The non monetary metals have fallen in conjunction with some other commodities and base metals.
Platinum was trading at $1457/1462 (1130 GMT).
Spot palladium was trading at $368/374 an ounce (1130 GMT).
Oil
Oil prices rose Thursday after dipping briefly below US$96 a barrel, indicating that traders were back in a buying mood after pocketing gains from crude's recent rally. Oil prices had surged to a record above US$98 a barrel in the previous session amid concerns about supplies, the weak U.S. dollar and OPEC's apparent reluctance to pump more crude into the market. Prices fell after the U.S. Energy Department's petroleum supply report Wednesday confirmed a view that oil supplies are falling, but offered no real surprises. The U.S. Energy Department's statistical arm reported that oil inventories fell 800,000 barrels during the week ended Nov. 2, half the decline expected by analysts surveyed by Dow Jones Newswires. Light, sweet crude for December delivery gained 45 cents to US$96.79 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange.
Gold surged a further $10.00 to $830.70 in New York yesterday. Silver surged to over $16 which is its highest level since 1981 and a 26 year high prior to falling but it remained up 5 cents on the day at $15.29. Gold has traded sideways in Asian and European trading and is trading at $832.50 at 1300 GMT.
After the recent surge in euro and British pounds, gold has sold off from yesterday's new record highs and is trading at £395.20 GBP (down from £402.20 ) and €568 EUR (down from €575).
Oil induced inflation, dollar and credit crisis risks are likely to keep the gold price at elevated levels in the coming months. Risk aversion is definitely rising and further diversification into safer asset classes is inevitable. We are seeing unprecedented demand and a marked increase in both the volume and size of orders. Where before intial inquiries would result in receiving payment in days, recently investors want into the market as soon as possible and payment is being received same day.
The FT reports that the surge in oil prices is leading to fears of global inflation. "U.S. stocks tumbled on Wednesday as the dollar hit record lows and mounting mortgage losses raised fears that credit turmoil could damage economic growth. The combination of events left investors worried about whether the Federal Reserve would be able to cut rates in response to the credit turmoil without further weakening the dollar or igniting inflation and pushing oil prices even higher."
Lex in the FT considers the possibility of oil at $100 and gold at $1,000. "Even for the most cold-blooded investor in modern financial markets, round numbers retain a primal fascination, notes Lex. So what to make of three big round numbers already out there or in the offing? Oil is nudging $100 a barrel. Goldbugs enthuse that $1,000 an ounce for the metal is not too far off. PetroChina has become the first company to hit a market cap of $1,000bn. This parade of ones and zeros does not appear to add up to much - the supply/demand picture for oil is little changed since $75 a barrel; dollar weakness and inflation fears have helped push gold higher; and PetroChina’s feat is entirely technical. But it is not wise to dismiss entirely the significance of these milestones as superstition. The factors behind these moves - a slowing U.S. economy, rising inflation risks, scarce oil and a massive, if isolated, stock market bubble - are serious concerns. Sometimes the focus on big numbers itself betrays real underlying anxieties."
Gold at $1,000 is extremely likely in the coming months. The long term average of gold to oil is 15 or historically, on average one ounce of gold can buy 15 barrels of oil. Today oil is at $97 per barrel and that multipiled by the average of 15 would result in gold at $1,455 (97 X 15).
"There is a flood of money coming into gold at the moment. You can't really stand in the way. There are hundreds of things that are supporting the market," said Jeremy East, global head of metals trading at Standard Chartered Bank.
Forex and Gold
The dollar has rallied somewhat overnight and this morning but remains near record lows versus the euro at 1.466 and at 2.1058 versus sterling.
The Telegraph in the UK warns of a global currency crisis and quotes Hans Redeker, currency chief at BNP Paribas: "We're seeing a loss of confidence in all paper currencies, but above all in the dollar."
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/07/bcngold107.xml
http://www.telegraph.co.uk/money/main.jhtml;jsessionid=V3TQOP1R3VY03QFIQMFSFFOAVCBQ0IV0?xml=/money/2007/11/08/cnsarko108.xml
Silver
Silver surged yesterday and then retraced its gains. It is likely to challenge at least $20 prior to year end and will likely outperform most other commodities in the medium and long term.
http://quotes.ino.com/chart/?s=FOREX_XAGUSDO&v=dmax
PGMs
The non monetary metals have fallen in conjunction with some other commodities and base metals.
Platinum was trading at $1457/1462 (1130 GMT).
Spot palladium was trading at $368/374 an ounce (1130 GMT).
Oil
Oil prices rose Thursday after dipping briefly below US$96 a barrel, indicating that traders were back in a buying mood after pocketing gains from crude's recent rally. Oil prices had surged to a record above US$98 a barrel in the previous session amid concerns about supplies, the weak U.S. dollar and OPEC's apparent reluctance to pump more crude into the market. Prices fell after the U.S. Energy Department's petroleum supply report Wednesday confirmed a view that oil supplies are falling, but offered no real surprises. The U.S. Energy Department's statistical arm reported that oil inventories fell 800,000 barrels during the week ended Nov. 2, half the decline expected by analysts surveyed by Dow Jones Newswires. Light, sweet crude for December delivery gained 45 cents to US$96.79 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange.
