Friday, December 29, 2006


Gold Finishes 2006 Up 23%

A report from Bloomberg. "The value of the dollar fell this year against currencies including the euro, partly on speculation the pace of U.S. interest rate increases would slow. New York oil futures dropped 12 percent this year when measured in pounds and 8 percent in South Korean won. They were up 1 percent in Japanese yen."

"Against the European common currency, the dollar lost 11 percent this year. The exchange rate was $1.3186 per euro today."

"The drop in the dollar also affects oil producing nations because the dollars they get for their exports buy less. Concern that the slide in the dollar has offset the overall gain in prices played a part in OPEC's decision this month to reduce crude supplies to support prices."

"'The recently weakening U.S. dollar may be an early reflection of diminished confidence in U.S. economic prospects,' OPEC's Vienna-based secretariat said in a monthly report. Producers watch for signs of slowing economic growth because it can slow oil demand and create a glut."

The Peoples Daily. "The value of RMB against U.S. dollar hit a new high on the final trading day of 2006. The central parity rate of RMB against U.S. dollar was set at 7.8087 yuan on Friday, breaking the 7.81 mark for the first time."

From MarketWatch. "Gold futures closed the final trading session of the year on a positive note Friday, chalking up a fifth straight day of gains and adding 23% in 2006. Gold for February delivery ended up $1.10 at $638 an ounce on the New York Mercantile Exchange, finding support in the dollar's mixed performance against major rivals."

"'Trading activity slowed considerably in the final hours of 2006, as traders took stock of another exciting year in precious metals,' said analyst Jon Nadler. 'The new year started out in the $520's but springtime had gold prices blossoming in a spectacular display of strength,' he said. 'From the end of March to May 12th, bullion gained about $200 and did not stop until reaching $725 per ounce.'"

"However, just one month later, gold had surrendered almost the entire gain and had fallen back to the mid $500's in an equally spectacular and sharp correction, he said. After that, the metal attempted a mid-summer advance, but fell about $50 short of its earlier peaks."

"For 2007, the direction of gold and the other precious and base metals 'very much depends on economic growth, and whilst there are signs of a slowdown in the developed nations, the powerhouses of the Far East will determine what happens next,' said analysts at U.K. spread betting firm Blue Index."

"But it will also depend on the direction of the dollar with more and more analysts expecting the greenback to have a rocky ride as more central banks switch reserves out of dollars into euros."

"'This was the year when the dollar's waterfall slide not only accelerated, but came to a neighborhood near each individual and institutional investor,' said Nadler. 'Next year may well be the year when the man in the street decides that getting out of some dollars may not only be prudent, but that it may save their very portfolio.'"

"Silver futures closed down 0.5 cent at $12.935 an ounce, but chalked up a 45.5% gain on the year. Platinum futures closed up $23.10 at $1,139.30 and gained 17% on the year. Sister metal palladium rose $10.55 to $338.50 an ounce. The metal has gained 32% in 2006."

Well, it was a wild ride, but those are respectable numbers. The US$ weakness is the biggest story of the year IMO. We'll go at it again in 2007!
Wishing you a wonderful new year. Thanks for 2+ years of blogs! And I promise to get going with gold investments in 2007.
NCDEX (India) to create 10gm "mini-contracts" for gold.

This follows on the heels of their success with 100gm contracts.

" sohonyc said...
NCDEX (India) to create 10gm "mini-contracts" for gold."

...and last week Shanghai started it's small investor class ETF. Seems the turn has shifted toward the 'gleam'
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