Monday, April 03, 2006

 

Gold Futures Cross $600 Mark

Bloomberg has the days trading numbers. "Gold prices in New York rose as investors bet precious metals will outperform U.S. stocks and bonds, pushing the precious metal close to $600 an ounce for the first time since 1981. Gold has jumped almost $100 an ounce, or 19 percent, since the end of November. The Standard & Poor's 500 Index has climbed 4.6 percent, and holders of the benchmark 10-year U.S. Treasury lost 1.6 percent in the same period."

"'People are piling in' for gold, said Duncan Cruickshank, an analyst at Commodity Warrants Australia Pty in Sydney. 'People will make money even if they buy at these levels.' He predicted the precious metal will reach $600 this week."

"Gold futures for June delivery rose $7.60, or 1.3 percent, to $594.30 an ounce on the Comex division of the New York Mercantile Exchange. The most-active contract last breached $600 on Jan. 6, 1981. Futures for August delivery have climbed above $600."

"Gold gained as the dollar dropped against the euro, extending a first-quarter decline. Gold moved in tandem with the euro from 2002 to 2004. Last year, gold gained in all currencies, paced by a 36 percent gain in euro and yen. The dollar gained 14 percent against the euro in 2005."

"Investors are also buying gold to guard against accelerating energy prices, which is fueling inflation, traders said. Crude oil rose to a two-month high after Iran, the world's fourth-biggest supplier, tested its fastest torpedo, escalating a dispute about the country's nuclear-research program. Prices are up 18 percent from a year ago."

"'Despite 15 rate hikes on the part of the Fed, several by the ECB and expectations of future tightening in Japan, global monetary policies remain accommodative,' Michael Darda, chief economist at MKM Partners said."

"Some analysts said gold may fall as high prices deter jewelers, who accounted for 73 percent of purchases last year.

"'Investment jewelry demand, mainly in India and the Middle East, has been the most affected by the price surge,' Virtual Metals, a London-based consulting company, said today in its bi-annual review of the gold market. Gold production will exceed demand this year amid the decline in purchases by jewelers, Virtual Metals said. Gold may move into a surplus of 422 metric tons in 2006 from a shortfall of 310 tons last year, Virtual Metals said."

"Silver for May delivery rose 24.5 cents or 2.1 percent to $11.764. Prices earlier reached $11.815, the highest since September 1983."

And from the Financial Times. "Bobby Godsell, chief executive of AngloGold Ashanti, predicted that worldwide gold production would stagnate, then fall in the coming years as large deposits of the precious metal become scarce. In an interview with the FT, Mr Godsell warned that the gold industry will find it hard to keep up current levels of production. 'All of the gold majors are finding it difficult to replace their reserves. New mine production will be flat-to-declining.'"

"RBC Capital Markets in London estimated that total gold production would rise slightly in 2006 and 2007, be flat in 2008 and start to fall in 2009. 'There hasn’t been a big gold discovery for years,' said an analyst."

"Mr Godsell said: 'Gold is precious because it is scarce. Twenty years ago the majority of gold was produced by four old world countries: South Africa, Australia, Canada and the US. In the future it will be anything but. Tomorrow’s ounces of gold are going to be in interesting countries.'"

Comments:
Ben,
That socionmic (however you spell it) post on REbubble is creaping me out, the one about horror movies and discontent are precursers to bad economic happenings.

I was thinking the newer movies were getting TOO GOREY and I couldn't real give a hoot. The overall discontent building is palpable to me.

I am all in on metal miners now.. WTZ, GG, GRS and some small exploration gambles.

You posted long ago that you were in the deflation camp and I am just now starting to believe you. Bernake can't give away money. Hell the Japanese lowered their rates to 0 (didn't they), I know at one point bank depositors got negative interest on their deposits. They didn't call it that, but they got no return on their money and had to pay fees to the bank.

I think deflation now might be the quickest way through our monetary woes as long the US stays so chocked on debt that consumers dare borrow no more. The new BK laws may just facilitate this.

It seems to me that the fed may not be able to inflate (print) us out of deflation if there are no willing dollar borrowers. I see the pending defaults in american consumer debt going a long way toward the destruction of much of the past fed largess and also providing a huge disincentive to foreigners consumption of dollars no matter the return.

I feel the collapse of the US consumer will kneecap industrial metal prices (ie.. copper, lead, nickel, etc..)

My question to you is, in a deflationary scenario do you see the prices of precious metals falling?
 
'do you see the prices of precious metals falling?'

Yes. In the short term. Eventually all paper currencies deplete to nothing.
 
do you see the prices of precious metals falling?'

Yes. In the short term. Eventually all paper currencys deplete to nothing.
 
I've been pondering this ever since I first read Prechter's "Conquer the Crash" a couple years back; those EWI folks are convinced that PMs will crash before they soar. I'm not so sure...

Perhaps a topic for discussion next weekend??
 
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