Wednesday, February 22, 2006

 

Gold Demand Up 26%: WGC

Reuters has the days' money and metals action. "Gold prices edged lower but held in a narrow band on Wednesday, with the market recovering its poise after a brief dollar-related dip, traders said. Spot gold edged to $553.90/554.80 an ounce in New York afternoon trade, below Tuesday's late quote at $554.70/$555.40. Prices have fallen nearly four percent from their 25-year highs of $574.60 earlier this month."

"Gold momentarily drifted below $550.00 an ounce when the dollar firmed after the U.S. January consumer price index rose 0.7 percent, against forecasts of a 0.5 percent increase. A cheaper dollar often encourages gold buying in foreign currencies, while a stronger U.S. currency can prompt sales for quick profits."

"In other precious metals, silver edged up 4 cents to $9.60/9.63 an ounce, while platinum fell to $1,023/1,027 an ounce from $1,027/1,031. Palladium was quoted at $284/288 an ounce, compared with $290/294."

Reuters got this wrong. "The market also was digesting a World Gold Council report showing fourth quarter 2005 global demand for gold fell 15 percent from the year-earlier quarter." I checked the WGC's web site and here is what they found. "The World Gold Council today announced that demand for gold had hit a record of $53,6-billion in 2005, with a 26% rise in investment demand in tonnage terms in 2005 and a jewellery demand that was 14% higher in dollar terms than 2004 despite the impact of a volatile price in the last quarter."

"Investment in Exchange Traded Funds (ETFs) increased by 79 t during the last quarter of the year alone and it is estimated that other institutional investment in the period approached 200 t."

Comments:
why do people buy mere worthless relics, baubles and trinkets of a bygone era?
 
OT, quick question. I was listening to Bob Brinker who has a financial radio show on the weekends. He stated that the yield curve is not really inverted until the 91 day yield is below the 30 year. Seems like the curve is continuing to invert but I can not find the 91 yield to see if it is at or below the current yield (4.48). Does anyone have a link that would give me the 91 day yield?

thanks,
Mark
 
Couple of yield curev charts.

http://finance.yahoo.com/bonds/composite_bond_rates

http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.html

The 3 month is the 90 day, and it has not inverted yet. But I don't agree with Bob on this. The 2 to 30 at nearly 20 basis points kills the carry trade. A short inversion could possibly not herald a resession, but this one is deep and hard. Just hope its only a resession.
 
Actually, upon review the Treasury sight shows the 90 day inverted where as Yahoo does not.

Still, I don't really think it matter at this point.
 
thanks OC Bear,
I have not followed the yield curve before but it sure looks unusual. With its predictive history, it does not look positive for economic growth down the road. Gold's price appreciation does not seem to predict low risk premiums are in order either. Yet the stock market just sees to be going on a slow but steady upward path? Maybe the calm before the storm.
Mark
 
You guys read the recent articles on the Dow Theory non-confirmations? Those and other technical indicators put the market on the edge of the cliff.

Every day brings more bad news that's incredibly bullish for PMs.
 
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