The Daily Gold » Currencies

Silver Avoids 4th Straight Quarterly Loss, Gold Heads for Gains, India’s Imports “Overstate Trade Deficit”

BullionVault — Fri, 30 Mar 2012 22:53:59 +0000

U.S. DOLLAR gold bullion prices hit $1669 an ounce ahead of US trading, more or less in line with where they started the week.

Stocks and commodities edged higher and US Treasuries dipped, while the Euro gained ahead of today’s Eurozone finance ministers’ meeting in Copenhagen.

Silver bullion meantime rose to $32.61 – a gain of 1% from the start of the week.

Heading towards the end of the first quarter of the year, gold bullion prices looked set to record their highest ever quarter-end London Fix of in Dollars, Euros and Sterling.

Silver meantime avoided a fourth straight losing quarter, positing gains of 15% in Dollars, 11% in Sterling and 11.6% in Euros.

However, most of the net gains in gold and silver for Q1 came in the first week of January, with gold having fallen sharply since gold failed to break $1800 last month.

“The physical market has stopped playing an important supportive role,” one Singapore dealer told news agency Reuters this morning.

“There is so much physical material, yet we don’t see any good offtake, as people are worried that it’s not the right time to invest in gold now…we don’t expect to see real physical demand until prices drop below $1600.”

Many Indian gold dealers remained on strike Friday, having closed their stores for the past fortnight following the Union Budget on March 16 which doubled the import duty on gold bullion and introduced a 1% tax on gold jewelry sales.

India’s government has said it is reviewing the gold sales tax, but finance minister Pranab Mukherjee says the import duty hike will not be reversed.

India imported an estimated 969 tonnes of gold bullion in 2011, according to World Gold Council data.

Including gold bullion imports in its trade figures may be “overestimating” India’s current account deficit problem, according to Rajeev Malik, senior economist at Asia-Pacific investment group CLSA.

“Although it is technically correct to include gold imports and exports in the current account balance as per IMF guidelines,” Malik says, “we peg the ‘overestimation’ of the current account deficit due to net gold imports to be around 20 to 30%.”

“The close to $200 billion in imported gold over the past decade does not represent a drain on India’s resources,” adds Taimur Baig, chief economist India, Indonesia and Philippines at Deutsche Bank.

“Rather [it is] a diversification of India’s wealth into precious metals.”

One senior gold industry figure, Rajan Venkatesh of bullion bank Scotia Mocatta, suggested this week that the Indian government could encourage gold certificates and other measures to encourage people to deposit gold with the banking sector.

Turkey meantime, which like India has a current account deficit and satisfies much of its gold consumption via imports, is also considering proposals designed to encourage the growth of gold deposit accounts in its banking sector.

“Turkey has historically been affected by repeated currency crises and resultant inflationary pressures, hence households traditionally hold substantial amounts of gold,” says the latest precious metals note from French bank Natixis.

This week, Turkey raised the proportion of Turkish Lira reserves banks can hold as gold from 10% to 20% – while cutting the proportion of foreign exchange reserves that can be held as gold from 10% to zero.

Combined with the move to encourage gold deposits with banks, the moves represents “an easing of monetary conditions, as well as enabling the Turkish banks to bolster their balance sheets through the use of a cheap source of capital,” says Natixis.

Back to Friday, and “focus is firmly on the Eurozone,” says a note from Marc Ground, commodities strategist at Standard Bank.

“We expect precious metals to follow the gyrations of the Euro/Dollar as markets react to speculations and/or announcements on this front.”

Eurozone finance ministers were today expected to approve combining the €440 billion temporary European Financial Stability Facility with the €500 billion permanent European Stability Mechanism when the latter becomes operational in July.

The move is aimed at raising Europe’s so-called ‘firewall’ against sovereign debt contagion, which was identified at last month’s G20 meeting as a prerequisite for additional International Monetary Fund aid.

“If the investors deem the plan as sufficient in reducing near-term Eurozone liquidity issues, we believe risk assets including gold may benefit,” says a note from HSBC today.

Since many Eurozone policy announcements have already been leaked, however, any moves in gold and silver prices are likely to be “knee-jerk reactions, rather than signal a new longer-term trend” says Standard Bank’s Ground.

Spain, which was hit by a general strike yesterday, was due to unveil a so-called austerity budget Friday.

Norway’s $610 billion sovereign wealth fund meantime – which owns 2% of all European stocks – is to cut its exposure to Europe from 60% of its assets to 40%, the Financial Times reports.

Iran has been helping Syria to ship oil to China in defiance of Western sanctions, Reuters reported today.

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Will the Situation in the Stock Market and in the Dollar Affect Gold?

Sunshine Profits — Fri, 30 Mar 2012 22:51:15 +0000

Based on the March 30th, 2012 Premium Update. Visit our archives for more gold & silver analysis.

This Wednesday Goldman Sachs reiterated its position that investors should buy gold. Goldman Sachs remains bullish on the precious metal, citing the familiar fundamentals– low interest rates and subdued economic growth as catalysts for gold prices to rise this year.

Goldman economists expect another round of quantitative easing from the Federal Reserve will weigh on the U.S. dollar and push gold higher. From Goldman:

Gold prices remain too low relative to the current level of real rates. Under our gold framework, US real interest rates are the primary driver of US$-denominated gold prices. However, after being remarkably strong in the first half of 2011, this relationship broke down last fall, with gold prices falling sharply in the face of declining US real rates, as tracked by 10-year TIPS yields. While gold prices have returned to trading with a strong inverse correlation to US real rates since late December, at sub-$1,700/toz they remain below the level implied by the current 10-year TIPS yields.

The gold market’s expectation that real rates would be rising along with economic growth may help explain this valuation gap. We believe that despite last fall’s decline in 10-year TIPS yields, the gold market may have been expecting that real rates would soon be rising along with better economic growth, leading to a sharp decline in net speculative length in gold futures. Accordingly, a simple benchmarking of real rates to US consensus growth expectations suggested a level of +40 bp by year end. Our models suggest this higher level of real rates would be consistent with the current trading range of gold prices. As we look forward, our US economists expect subdued growth and further easing by the Fed in 2012, which should push the market’s expectations of real rates back down near 0 bp and gold prices back to our 6-mo forecast of $1,840/toz.

The firm says that strengthening U.S. economic data would represent a growing risk for gold.

“We reiterate our view that at current price levels gold remains a compelling trade but not a long-term investment,” Goldman says.

In general, we disagree, as we believe that gold is a very good long-term investment. To see how the USD Index and the general stock market fit into this picture, let’s move to the technical part of today’s essay. We start with the USD Index chart (charts courtesy by stockcharts.com).

This week the index moved a bit lower, down 1.64 or 2% since last Thursday. It is no longer close to its 2011 high and prices are now visibly below the 80 level and more or less at the long-term resistance line. No breakout has been seen so far.

In the short-term USD Index chart, it appears that we may see another small rally in the days ahead. A cyclical turning point is at hand, and with declines having been seen for a couple of weeks now, a local bottom could form followed by a small period of moves to the upside. If it does occur, it will likely be short lived since the main, medium-term trend is now down.

Although the very short term may see some strength here, this does not necessarily translate to weakness in the precious metals sector. A rally in both gold prices and the USD Index would result in gold appreciating from a non-USD perspective. In fact, this is something which appears to be in the cards as well.

Let us move on to the general stock market now.

In the long-term S&P 500 Index chart, it seems that stocks may pause soon, as they’re about to reach their 2008 highs. Thursday’s closing index level was just 2-3% below this resistance line. If prices decline from here, they will likely not go lower than to the level of the 2011 highs. We would then expect the rally to continue in a manner similar to what was seen in late 2010.

In the short-term SPY ETF (proxy for S&P 500) chart, we see a bit of a different picture. Here, stocks are at a short-term support line, so it seems that the next short-term move will be to the upside. It’s likely however that this move will be somewhat short-lived based on the previously discussed situation on the long-term chart.

Can the above situation be bearish for the precious metals market? Let’s take a look at the correlation coefficients between stocks and gold, silver and mining stocks.

The Correlation Matrix is a tool, which we have developed to analyze the impact of the currency markets and the general stock market upon the precious metals sector.

Two weeks ago we wrote the following on the dependencies between precious metals, currencies and the stock market:

The general stock market simply does not appear too important for gold, silver and the gold and silver mining stocks. (…)

The strong negative correlations between the USD Index and the precious metals continue. The implications appear bullish for the medium term and somewhat unclear for the short term.

The situation changed slightly in the short-term correlations: Gold, Silver and Mining Stocks seem to be correlated moderately strongly with general stock market, whereas the short-term correlations between Silver and USD as well as Mining Stocks and USD seem to have weakened.

In general, the coefficients this week are not very strong with many of them in the range of -0.5. It seems much better to focus on the clearer technical situations in the gold and silver markets as opposed to what we now see in currency and stocks.

Summing up, The situations in the USD Index and the general stock market seem a bit unclear for the upcoming two week period. The USD Index may move a bit higher and a small move to the upside may be seen for stocks as well. Both moves appear to probably be short-lived, however, with stocks likely to soon correct and a subsequent move to the downside seemingly in the cards for the USD Index. This is not expected to have any serious bearish impact on gold, silver or the gold and silver mining stocks.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It’s free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
www.SunshineProfits.com

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All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Physical Gold Demand “Picks Up” in Asia After Price Falls, But Further Drop “Could See Focus on $1500 Gold”

BullionVault — Sat, 03 Mar 2012 00:40:23 +0000

Friday 2 March 2012, 08:45 EST

Physical Gold Demand “Picks Up” in Asia After Price Falls, But Further Drop “Could See Focus on $1500 Gold”

THE U.S.DOLLAR gold price fell to $1708 an ounce Friday lunchtime in London – a 0.9% drop on Friday’s Asian session high – as stock and commodity markets also fell slightly amid ongoing uncertainty over the Greek bailout deal.

“Another move below $1690 will have the market refocusing back toward $1500,” says the latest note from gold bullion dealing bank Scotia Mocatta’s technical analysis team, referring to the low hit after Wednesday’s $100 per ounce drop.

The gold price has not fallen so hard “since the days of Lehman’s collapse” adds Scotia.

“The broader macro backdrop,” adds Barclays Capital, “remains gold-favorable, given the negative interest rate environment, longer-term inflationary concerns and lingering sovereign debt uncertainties.”

“At these price levels we’ve seen interest in the physical market pick up, particularly from Asian buyers,” says Marc Ground, commodities strategist at Standard Bank.

The silver price meantime fell to $34.88 – a 1.7% weekly drop, but a 3.4% gain on where it ended the first Friday in February.

Heading into the weekend, the gold price was looking at a 3.6% weekly loss, and 1.1% down on the Feb. 3 close.

European leaders meeting in Brussels have signed off the Greek bailout deal. However, more than half the €130 billion rescue package will be held back until the Greek government provides a “detailed assessment” next week of how it will implement 38 required measures.

The funds being released will facilitate Greece’s ongoing debt restructuring with its private creditors. Yesterday, the International Swaps and Derivatives Association’s Decisions Committee ruled that the Greek government’s retroactive insertion of collective action clauses (CACs) – which could force private sector bondholders to accept the agreed deal with haircuts estimated around 70% – does not constitute a credit event.

ISDA’s decision that the existence of CACs does not constitute default means credit-default swaps, held by many investors to hedge their Greek debt positions, will not pay out. However, ISDA could still be asked to adjudicate on the related question of whether enforcing those CACs should trigger CDS payments.

“They will have to enforce CACS,” says Alessandro Giansanti, senior rates strategist at ING Groep in Amsterdam.

“At that point the exchange will become coercive and that will be a restructuring event for CDS.”

“The sovereign CDS market is crying out for an injection of confidence,” adds Nicholas Spiro, managing director of Spiro Sovereign Strategy, a London-based consultancy specializing in sovereign credit risk.

“It’s very important, particularly in much larger bond markets like Italy and Spain, that investors’ hedges are perceived to be credible.”

“If I were a buyer of protection on Greece…I would be upset [by ISDA's decision],” Bill Gross, co-founder of world’s largest bond fund Pimco, told CNBC Thursday.

Pimco however was one of the fifteen financial institutions on the Decisions Committee that voted ‘No’ to the question of whether inserting the CACs should trigger CDS payments.

German opposition to increasing the size of the Eurozone’s so-called firewall meantime appears to be diminishing, German newspaper Der Spiegel reports.

“Madame Merkel and I agreed that we would take a decision at the end of this month on this subject,” French president Nicolas Sarkozy told reporters in Brussels.

Germany has so far opposed taking unused funds in the temporary bailout mechanism, the European Financial Stability Facility, and adding them to the €500 billion European Stability Mechanism when the latter becomes operational in July.

European leaders however were told by their G20 counterparts that they could not expect more International Monetary Fund aid unless the firewall was built higher.

European banks meantime deposited a record €776.9 billion with the European Central Bank on Thursday, one day after the ECB’s second longer term refinancing operation saw banks borrow nearly €530 billion.

Bundesbank chairman Jens Weidmann has “squared up” to ECB president Mario Draghi in a letter leaked on Wednesday, today’s Financial Times reports.

In the letter, the FT says, Wedimann tells Draghi the ECB should reconsider its December decision to extend the eligibility criteria for collateral banks can post against their ECB borrowing.

“The letter was only written so that it could be made public,” the FT quotes one Eurozone official.
“It’s no accident that it came just after the LTRO.”

Over in the US, Federal reserve chairman Ben Bernanke spent a second day testifying to Congress Thursday, a day after his comments to the House Financial Services Committee were widely blamed for Wednesday’s gold price plunge.

“We don’t see at this point that the very severe recession has permanently affected the growth potential of the US economy,” Bernanke told the Senate Banking Committee, in a session that finished ahead of schedule.

In Beijing meantime the Bank of China has partnered with the world’s largest derivatives exchange operator CME Group – which runs the New York Comex – to explore Yuan-denominated futures contract settlement, China Daily reports.

Yuan-denominated gold futures will reportedly be one of the ideas investigated.

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Gold Still in the Red from a Short-term Perspective

Sunshine Profits — Tue, 14 Feb 2012 20:30:27 +0000

Based on the February 10th, 2012 Premium Update. Visit our archives for more gold & silver analysis.

There is a study published by the Credit Suisse and the London Business School that says that gold prices have been too volatile to play a reliable role as a hedge against inflation over the past 112 years.

While inflation does not reduce gold’s real value, it has no yield or income flow and the precious metal has given a far lower long-term return than equities in the period since 1900, or 120 years, says the study. Generally, the analysis is conducted based on periods when gold was money and where it was not and we believe that these two should not be mixed.

We realize that gold does not give income or interest. People invest in gold is a search for yield through capital appreciation or as a safe haven – or as money. When interest rates are close to zero or negative in real terms, gold begins to glimmer. The US, Europe, the UK, China, India, gold’s biggest markets, all have negative real interest rates. It is true that the past 112 years have not all been good for the yellow metal. Yes, there are bull markets and there are bear markets and we are in the midst of a bull market in gold right now.

In the period since 1900, gold gave a real return of 1.1 percent in sterling terms and its value fluctuated widely, said the study. “Gold is the only asset that does not have its real value reduced by inflation. It has a potential role in the portfolio of a risk-averse investor concerned about inflation,” it said. “However, this asset does not provide an income flow and has generated low real returns over the long term. Gold can fail to provide a positive real return over extended periods.”

True. That’s why we are invested now, while gold is in the midst of a bull market. When it swings into a bear market we’ll consider other options or perhaps evaluate the profitability and risk of trading the downswing – impossible to tell at that point. However, the key issue is that one does not have to be fully invested in the precious metals sector during bear markets – what is the assumption of the study.

Mohamed El-Erian, CEO and co-chief investment officer of bond fund giant PIMCO, said that given the fragile global economy and geopolitical risks, investors should be underweight in equities while favoring “selected commodities” such as gold and oil.

Obama seems to have run into a good streak of luck in his bid to get reelected president. Just in the nick of time, the U.S. economy is improving, at least as evidenced by last Friday’s jobs report. Payrolls numbers are up by 243,000 jobs. Unemployment is down to 8.3 percent.

The Sunshine Profits Team extends our best Valentine’s Day wishes. To see if you’ll fall in love with the precious metals sector again, let’s begin the technical part with the analysis of the yellow metal. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)

We begin with the chart of gold from a non-USD perspective. Last week there was a weak consolidation from a non-USD perspective and the strong similarities to the trading patterns of mid-2011 are no longer in place. With these developments, it is unlikely that a move to the upside will be as sharp this time. We have seen two consolidations this time and last year there was only one small stop, after which gold’s price immediately shot upward. This chart suggests that a sharp rally is not a likely probability and that further consolidation is quite possible at this time.

In the long-term chart of gold from the perspective of the Japanese yen, we see that the RSI level over 60 and this suggests that the local top may be in or is at least close. In the past, when the RSI held close to the 70 level for some time, local tops have been seen. Such is the case today. Prices are also close to the middle of the trading range but not at it, so a pause appears likely though not yet imminent.

So, will gold decline from here? Most likely yes, but not very far. The additional confirmation of the short-term bearish case comes from the general stock market, as gold has been recently moving in tune with stocks. Consequently a turnaround in stocks could ignite a move lower in gold as well.

The next local top in stocks will probably be close to the level of the 2011 high. The recent trading pattern has been consistent with the period leading up to the local top in 2010-11. In October-November 2010, declining prices were seen for a few weeks but were quickly followed by a continuation of the rally. We may have a similar situation here.

RSI levels should be looked at as well and are also indicating that a rally is likely ahead. It appears that it could last for two to four weeks as the RSI level will then likely be close to 70. This has coincided with local tops in the past.

The short-term (and short-term only) bearish case for gold is further confirmed by the actual recent action in the silver market which has followed what we outlined in our essay (February 10th, 2012) on the likely silver pullback:

Silver’s price has been in a sideways trading pattern during the past two weeks after a strong rally in which the red support-resistance line was pierced and volume levels were significant. With silver now above this line, it seems that a move back to it, a test of the breakout may in fact be seen. The 38.2% Fibonacci retracement level based on the 2002 to 2011 rally is also in play and will likely assist in stopping a decline as well.

(…) the medium and long-term outlook for silver remains bullish but – also based on the analysis of the USD Index – the short term is now more bearish than not.

Summing up, the outlook for gold remains bullish for the medium and long term but is now rather bearish for the short term.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
www.SunshineProfits.com

* * * * *

Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio?

Sunshine Profits provides professional support for

Gold & Silver Investors and Traders.

Sunshine Profits — Fri, 10 Feb 2012 22:04:11 +0000

The Dollar Confirms a Possible Silver Pullback

Based on the February 10th, 2012 Premium Update. Visit our archives for more gold & silver analysis.

“It was the best of times, it was the worst of times, it was the age of wisdom (for those who invest in gold) , it was the age of (central bank) foolishness, it was the epoch of belief (in Chinese growth) , it was the epoch of incredulity (in fiat money), it was the season of Light, it was the season of Darkness, it was the (Arab) spring of hope, it was the winter of (Syrian) despair.”

With several of our own additions in parenthesis, these are the opening lines of the famous novel “A Tale of Two Cities,” by Charles Dickens whose 200th year birthday was celebrated around the world this week. His words seem just as true and relevant today as in the time in which they were written.

Greece played the Artful Dodger this week and missed another deadline to approve conditions for a second €130bn bail-out on Tuesday night because of last-minute haggling with international lenders over emergency spending cuts. Negotiations to save Greece from a disorderly default are now teetering on the edge.

The delay fueled anxieties that Athens may be forced into a messy default next month and triggered concern over whether Greece remains committed to fiscal reform after two years of failing to implement measures agreed in return for financial support. Greece has already missed two deadlines this week. Finally a deal was presented for approval at a meeting of eurozone finance ministers Wednesday only to be sent back to Greece as incomplete with a fresh set of demands and an urgent deadline. The eurozone finance ministers dismissed as incomplete a reputed €3.3bn package of Greek budget cuts and sent the country’s finance minister back to Athens with a fresh set of demands and an urgent deadline. They also warned of more intensive involvement in the Greek economy to improve tax collection and accelerate the sale of state-owned assets.

Earlier in the week the Great Expectations that a Greek rescue plan will be completed drove the dollar down sharply against the euro and boosted gold 1.5 per cent on Tuesday.

Gold could face a short-term pullback if Greece strikes a deal, as it may hurt the appeal of safe-haven assets, but on the other hand it will be good for the euro (bearish for USD Index), which might be bullish for gold. In the long run, the lingering euro zone debt crisis is expected to support sentiment in gold.

Charles Dickens said: “Do all the good you can and make as little fuss about it as possible.” To see what good we can do for precious metals investors, let’s begin the technical part with the analysis of the USD Index. We will start with the very long-term chart (charts courtesy by http://stockcharts.com.)

In the very long-term USD Index chart we see no significant changes. Thursday’s closing index level is slightly below that of a week ago, but the recent move back below the long-term resistance line has not yet been confirmed. The index level is now more or less right at this support-resistance line, and the medium/long-term situation is slightly more bearish than not.

In the short-term USD Index chart, we see that the index “somewhat bottomed” at the cyclical turning point. Instead of a rally, a pause has followed with some sideways trading and small moves to the downside although declining at a much slower pace than seen in previous weeks. It seems likely that the index could actually rally in the very short term but the outlook for the medium term is bearish.

The situation for the USD Index appears rather bearish for the medium term but bullish for the short term, which might be a bearish short-term indication for the precious metals sector. It is also consistent with our recent view on the mining stocks part of the precious metals sector published on February 3rd, 2012 in our essay on the likely top in mining stocks:

(…) the medium- and long-term outlook for the gold and silver mining stocks is positive, however a correction is likely to be seen soon – perhaps it will start next week. Long-term investors should consider purchasing junior mining stocks, while short-term traders might want to trade the coming correction.(…) if you’ve been considering trying out our Premium Service, it appears to be a good idea to do so now.

Since the dollar is negatively correlated with the precious metals market, the likelihood of a rally is bearish factor for the precious metals sector – also for silver.

A look at the very long-term chart (if you’re reading this essay at www.sunshineprofits.com, you may click on the above chart to enlarge it) reveals a rather uneventful week. Silver’s price has been in a sideways trading pattern during the past two weeks after a strong rally in which the red support-resistance line was pierced and volume levels were significant. With silver now above this line, it seems that a move back to it, a test of the breakout may in fact be seen. The 38.2% Fibonacci retracement level based on the 2002 to 2011 rally is also in play and will likely assist in stopping a decline as well.

Summing up, the medium and long-term outlook for silver remains bullish but – also based on the analysis of the USD Index – the short term is now more bearish than not.

Thank you for reading. Have a great weekend and profitable week!

P. Radomski
Editor
www.SunshineProfits.com

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Abandoning The Dollar For Gold

Jan Skoyles — Fri, 10 Feb 2012 06:56:20 +0000

Jan Skoyles looks at the recent stories of countries abandoning the dollar for gold in international transactions. This will have implications for the gold price, but will it have an impact on further debates involving the gold standard. At The Real Asset Co we promote a return to sound money and so developments such as those discussed below always grab our attention.

Last month the papers were full of reports stating Iran had agreed to sell their oil to India in exchange for gold. The agreement to trade in gold sidesteps the sanctions issued by the EU and US law which prohibit all new oil contracts and have frozen the Iranian central bank’s assets in the EU. Soon after the India/Iran story there were reports of both Russia and China making similar deals with the Iranians.

This isn’t the first time international payment agreements have been rumoured to be taking place. In 2009, there were reports of the Arab states, along with Russia, China, Japan and strangely, France, to start trading oil using a new basket of currencies. This basket was rumoured to include the Japanese yen and Chinese Yuan, the euro, a new, single currency planned for nations in the Gulf Co-operation Council and of course, gold.
Nothing has come to light in any of these instances. But such rumours do impact upon both the gold price and further discussions of a return to some form of the gold standard.

Gold tactics

These sanctions on Iran are also not new ‘nor is the use of gold as a response to certain actions.

Back in late 1979, Iranian student Revolutionary Guards stormed the US Embassy, in Tehran, taking several US Hostages. The Americans responded by freezing Iran’s gold which was held in Fort Knox. The Iranians responded by panic buying gold from Zurich. The freezing of gold assets by the US Federal Reserve made other countries realise their gold was no longer safe, sparking a gold buying spree by the Middle East. This was enough to push the gold price above $850.

This act of lawlessness by the Iranian Revolutionary Guards was of course wrong – in the same way starting a nuclear war would be wrong. However the actions by the US government in 1979 was also wrong, as it is today for both the US and the EU to implement sanctions. They may, possibly, prevent a nuclear war, but an economic war seems likely.
This reoccurring issue of abandoning the US dollar, in order to push a political motive, for another national currency, a basket of currencies or even gold raises the question of whether it is ever a sensible idea to have one national currency as the international reserve currency.

Bad money

Canadian economist Robert Mundell argues no national currency should ever be used as a leading reserve currency. He argues precious metals were used as international money over the centuries ‘because they were more efficient than other instruments in fulfilling the required functions of money.’ Mundell goes onto argue that currencies which are controlled at the whim of a government tend to weaken over the long term as supply begins to outweigh demand.
For Mundell, currencies in which there are opportunities to exploit and overvalue due to the monopoly of government, is ‘bad’ money. This has been no more the case than with the United States and the dollar. It now seems countries which are growing rapidly and have significant trading weight, are rapidly losing confidence in the US dollar and beginning to realise there is an alternative.

Paul Fabra states that whichever country’s fiat money you use, it will be dangerous; ‘in a world where real money is replaced by fiat money and monetary reserves increasingly consist of other countries’ fiat money, the monetary system resembles a house of cards.’

To have power of a monetary system is to remove democratic rights from those participating in that monetary system. This applies to both citizens of the currency and those who trade with them.

Gold money is danger money

For those who abandon the US Dollar in the oil trade, the future does not look bright. In 2003 a Middle Eastern oil producing nation abandoned the dollar in favour of the Euro. A few months after their president joyously announced his decision the Brits and American invaded, toppling Saddam Hussein from power. It was not long after this Iran, in 2009, also announced their foreign currency reserves would also be kept in euros, rather than US dollars. Is this how wars begin? Is it in fact not about human rights or oil but is in fact about whose currencies are the toughest?

There are reportedly other factors at work here, which are apparently the cause of these currency wars – namely the nuclear threat from Iran. But it is worth discussing the undemocratic nature of using a country’s currency as an international currency.

The Libertarian Dr Tim Baker once said to me, he doesn’t know which currency is the right one but whatever currency is chosen by thepeople is the correct one. This was no more the case than is seen in the period of the Classical Gold Standard.

The Classical Gold Standard is the most famous commodity standard in history. The decision to move onto the gold standard around the late 1870s was not the result of an international treaty or summit as we so often see on the news. There were no group photos taken of our great leaders announcing they had decided on this brand new way to trade. No, it happened gradually and by choice.

Great Britain, at the time was the great economic and political power, and had operated on a gold standard ever since 1717. By 1880 Great Britain’s trading partners had realised that due to the influence and power of the Commonwealth, it would be advantageous to move from their own metallic standards to what is now known as the Classical Gold Standard.
We then saw the US take advantage of its position as the wealthiest, least scathed country to come out of both World Wars. This was its opportunity to exert its power over the global financial system. Through several stages, the Americans removed gold completely from the international monetary system.

Now, with their trillion dollars of debt and more supply to meet demand – the house of cards that is dominated by the joker US dollar is beginning to wobble.

As we alluded to in a recent article, the Chinese economy has astonished us all with their economic performance since the 1970s. The majority of the measures which useless economic groups such as the WEF use to assess countries, are met by the Chinese.

The Chinese are hoarding gold, they’re rumoured to be partaking in gold payments with Iran. Are we beginning to see the next stage of a global currency change? These countries, Iran, India, China and Russia have a lot of what we want – oil and manufactured goods.

It is also worth noting, Venezuela has, in the last week, received the last of its $11bn worth of repatriated gold. The head of Venezuela’s Central Bank told the press on Monday, “ [during periods] of global financial crisis and turmoil in the developed economic centres, gold becomes one of the principal safe assets because it is the only means of international payment that has its own intrinsic value — in other words it is not a debt of other countries.”

The relationship between Chavez and the US is commonly known to not be a good one. Chavez once famously stated, ‘I hereby accuse the North American empire of being the biggest menace to our planet.’ His moves to repatriate the country’s gold may be seen to be making a point to the American government, which has long coerced the South American continent, but is Chavez also making a savvy move towards self-sufficiency.

Gold and democracy

Gold is a way of expressing your democratic right – your right to choose- why should these countries operate with the US Dollar as the reserve currency? Growing economic powers such as China are likely to become the next world leaders, if they’re preparing to abandon a national currency for gold then maybe we’re beginning to see a second phase of the a gold standard. History repeats.

Jan Skoyles contributes to The Real Asset Co research desk. Jan has recently graduated with a First in International Business and Economics. In her final year she developed a keen interest in Austrian economics, Libertarianism and particularly precious metals.

The Real Asset Co. is a secure and efficient way to invest precious metals. Clients typically use our platform to build a long position and are using gold and silver bullion as a savings mechanism in the face on currency debasement and devaluations. The Real Asset Co. holds a distinctly Austrian world view and was launched to help savers and investors secure and protect their wealth and purchasing power.

Gold Gains Alongside Dollar, “Clear Winner” from S&P Downgrades is Germany as “Only Bond Haven Left in Eurozone”

BullionVault — Tue, 17 Jan 2012 00:30:46 +0000

BullionVault
Monday 16 January 2012, 08:45 EST

Gold Gains Alongside Dollar, “Clear Winner” from S&P Downgrades is Germany as “Only Bond Haven Left in Eurozone”

U.S. DOLLAR spot gold prices climbed to hit$1647 an ounce Monday morning in London – 0.8% below last week’s high – while stock and commodity markets were broadly flat as markets absorbed Friday’s news of cuts to nine Eurozone sovereign credit ratings.

“Spot gold [however] is expected to fall to $1417 per ounce over the next three months,” warns Reuters technical analyst Wang Tao in the newswires Q1 2012 commodities outlook published Monday.

“[The] medium-term downtrend that started at the Sept. 6 high of $1,920.30 will continue.”
Spot silver rose to $30.10 per ounce – 0.9% up on Friday’s close.

The Euro meantime fell 1.8% in Monday’s Asian session – hitting its lowest level since September 2010 – before stabilizing as Europe opened. Conversely, the Dollar Index – which measures the US currency against six others – hit a 16-month high at 81.7.

Spot gold in Euros hit its highest level since December 8 at €41803 per kilo (€1300 per ounce) – 5.4% off September’s all-time high.

Ratings agency Standard & Poor’s has cut its credit ratings for nine Eurozone members, having placed fifteen members on CreditWatch negative at the start of December. S&P cited “insufficient” policy initiatives from Eurozone governments as the main driver for the decision, as well as its concern that fiscal austerity measures could prove “self-defeating”.

Those affected include France, which had its rating cut by one notch from AAA to AA+. Five others, including Germany, had their existing ratings affirmed. S&P’s move, which was announced after markets closed on Friday, leaves only three triple-A rated Eurozone members – Finland, the Netherlands and Germany. Of those, only Germany has a ‘stable’ outlook, with S&P’s outlook for the other two given as ‘negative’.

“S&P’s action has reinforced the market’s view that the only haven in the Euro region bond market is Germany,” says Peter Chartwell, fixed-income strategist at Credit Agricole in London.

“Germany comes out as a clear winner,” agrees Jacques Cailloux, chief European economist at Royal Bank of Scotland.

“The French downgrade will complicate future negotiations around fiscal integration and comes at a delicate time domestically…[Germany] will have its position at the negotiating table strengthened even further.”

“There are a lot of risks still ahead of us and we don’t think gold has priced in these risks,” reckons Societe Generale commodity strategist Jeremy Friesen, adding that S&P’s decision “is one of the incremental pushes for gold to appreciate.”

Representatives of Europe’s banks meantime are considering asking French president Nicolas Sarkozy and German chancellor Angela Merkel to try to break the deadlock in negotiations over the size of losses private sector Greek bondholders should take, after talks broke down on Friday, the Financial Times reports.

European leaders agreed last October that private sector involvement (PSI) should amount to losses of 50%. However, “some [Eurozone government] collaborators are not following that decision,” says Charles Dallara, managing director of the Institute of International Finance, which is negotiating with Greece on behalf of private sector bondholders.

Germany has long been a proponent of PSI as a key component of any Greek crisis solution. French banks meantime have the highest exposure to Greek sovereign debt of any major European banking sector, according to Reuters data.

In China meantime, protesting workers at the Sanyo electrical factory, have clashed with police in the southern city of Shenzhen, according to Chinese press reports. The protests over pay and job security are the latest to hit China’s manufacturing sector.

Last week, workers at Foxconn, which produces Microsoft’s Xbox, threatened to jump off the factory roof in a dispute over severance pay and job transfers, while production was halted at an LG Display factory last month after workers went on strike.

China’s Q4 2011 GDP figures are due to be released Tuesday, with many economists forecasting that growth will have dropped below 9% to its slowest pace since early 2009.

Here in London, representatives of the Hong Kong Monetary Authority met with UK Treasury officials today to discuss steps aimed at making London a major offshore center for Chinese currency dealing.

Demand for gold jewelry in India grew between 5% and 7% last year – and is set to grow by up to 15% in 2012 – according to Mehul Choksi, head of India’s largest jewelry retailer said Sunday.
However, dealers in India report that last week’s rise in spot gold prices has curbed demand at the start of the harvest season, which began yesterday.

The difference between bullish and bearish contracts held by noncommercial gold futures and options traders on New York’s Comex exchange – the so-called speculative net long – rose 2.7% over the week ended last Tuesday to the equivalent of 433.7 tonnes of gold bullion, ending four weeks of declines, according to the latest data from the Commodity Futures Trading Commission.

“The change in the net position was the result of speculative shorts being unwound,” says Standard Bank commodity strategist Walter de Wet.

“Although only a modest improvement this past week, the decline in short positions is encouraging. Perhaps the speculative market is becoming less apprehensive about gold’s prospects.”

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Mining Stocks in for a Move Up

Sunshine Profits — Tue, 10 Jan 2012 22:15:16 +0000

Based on the January 10th, 2012 Premium Update. Visit our archives for more gold & silver analysis.

This may be the year that weaker member-states are booted from the euro. Will the continent fix its financial troubles or spiral out of control affecting not only the U.S. economy, but the global economy? The answer rests with Europe’s leaders. The sacrifices and austerity needed to preserve the currency zone and prevent a global financial collapse could become too heavy a burden for the political systems of one or more of the European nations. The whole house of cards is perched on thin ice. One wrong move and the world financial system would be in peril in the same way it was in fall 2008.

In the words of Dave Barry: “Moody’s announced that it has officially downgraded Greece’s credit rating from “poor” to “rat mucus” following the discovery that the Acropolis has been repossessed.”

But seriously, more eurozone troubles this year could mean more dollar (and gold!) buying even though there is no way to know how the euro will react in the short-term to such threats that may already be priced into the market. There is no doubt that the eurozone will be stronger without its weaker members. The problem is that the act of removing anyone from the eurozone will cause instability and will be a bullish factor for gold. If the European recession turns out to be mild or nonexistent, it could create a stock market rally and boost confidence worldwide.

For a funny look at the Eurozone problem we again turn to Dave Barry, who wrote that this past year “the economic crisis continues to worsen in Europe, especially in Greece, which has been operating under a financial model in which the government spends approximately $150 billion a year while taking in revenues totaling $336.50 from the lone Greek taxpayer, an Athens businessman who plans to retire in April. Greece has been making up the shortfall by charging everything to a MasterCard account that the Greek government applied for — in what some critics consider a questionable financial practice — using the name ‘Germany.’”

But Europe is not the only part of the world that has been troubled by recent economic conditions. Troubling signs suggest that the Chinese growth juggernaut, an anchor for the tumultuous past few years, could be slowing down, which raises risks for the global economy.

Can Chinese leaders guide their economy, the second largest in the world, to a soft landing making some overdue economic changes without halting growth? China’s growth has been fueled by exports of manufactured goods and real estate investments. Exporters could be hampered by the likely European recession, and the Chinese housing market is showing signs of trouble, a bubble about to burst. Now the question remains if China can shift to domestic demand for consumer goods and services, and away from exports and housing, without a major recession that could endanger global growth? That answer will help determine the health of the global economy in the coming year.

However, we do not need a fortune cookie to know that China will continue to buy gold, as much as it can get its hands on. China has every motive to move some of its massive $3 trillion-plus reserves into gold, the only currency that no other country can control. At the moment, the richest Western countries, including the United States, Germany, Italy, and the Netherlands, hold between 60% and 80% of their entire reserves in gold. The figure for China is less than 2%. The rest is simple math.

To see if this is translated into a bullish outlook for precious metals in the short-term is another thing. Our focus today will be on mining stocks. Let’s begin the technical part with the analysis of the Amex Gold Bugs Index (ticker HUI; charts courtesy by http://stockcharts.com.)

In the long-term HUI Index chart, we see that the index bottomed at the final support line and quickly rallied back above the 500 level. At this point, it appears to have reached the final bottom of this consolidation period. Gold stock prices are likely soar much higher. It seems that a breakdown back below the support line is very unlikely now as the index level is significantly above it.

In the short-term GDX chart, we see that the rally has paused somewhat in the last couple of days. The sharp move higher on significant volume was followed by a low volume pause. Consequently, it appears be just a pause and another rally is likely to be seen next. This is reinforced by the bullish situation for precious metals themselves, as argued in our last essay on the possible rally in silver:

(…) we see that the cyclical turning point worked perfectly as prices reversed sharply right at that point and then began to rise. These moves further increase the odds that we have seen a major bottom and it could very well be years before silver’s price is as low as it has been recently (or we may never see silver price as low as we just did).

This is by no means a sure bet, but twice previously, when silver bottomed at cyclical turning points in 2004 and 2010, we have seen an ultimate low – lower prices never followed. The long-term charts suggest that at least a medium-term rally is underway at this time.

The Gold Miners Bullish Percent Index chart has recently indicated good buying opportunities. This did not mean that a final low had been reached. It simply was a good time to buy. Gold stocks have since moved a bit lower but are now higher and apparently acting on the buy signal over the past couple of weeks would have been a good idea.

In the GDX SPY ratio chart, a bottom is seen and the ratio is still close to the 2010 lows. Precious metals have been extremely oversold and the RSI levels confirm this. Although the recent rally may seem sharp, it is truly not significant from a medium or long-term perspective. There is still a lot of room to the upside.

Summing up, the outlook for gold and silver mining stocks appears to be bullish, similar to the situation for gold and silver.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
www.SunshineProfits.com

* * * * *

Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio?

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Gold & Silver Investors and Traders.

Euro Hits New Lows, Swiss Franc Bounces: What Does That Mean For Precious Metals and Commodities?

Jeb Handwerger — Mon, 09 Jan 2012 19:02:48 +0000

Commodities In Characteristic Selloff

Once again at the end of 2011 we heard the voices of negation sounding the fear of the bursting of the commodities bubble. The naysayers come out with their Cassandra calls whenever commodities go into a characteristic and salubrious selloff. They never really learn to respect the importance of gold (GLD) and silver’s (SLV) role in the long range secular multiyear ongoing rise.
We emphasized the importance of avoiding knee jerk reactions when precious metals experience healthy pullbacks. The first week of January 2012 saw commodities (DBC) rising across the board as they return from the premature grave to which the naysayers have assigned them.
One wonders how the short sellers are enjoying this periodic resurrection in vital metals such as gold(GLD), silver(SLV), rare earths (REMX) and uraniums(URA).

Transparent Horizon Of Record Low Interest Rates
Attendant to a new rise in these vital commodities, the economic base should be prepared to receive them. On January 24th-25th the Federal Open Market Committee will be meeting once again in Washington. One of the areas on which they will be focusing is the travails of the U.S. Housing Market and new methods to bring down the high unemployment rate. The Fed is promising a transparent horizon of record low interest rates to provoke the banks to lend money.
It is important that the Eurozone malaise undergo corrective measures in order to restore Europe to health. Recently Christine Lagarde, Head of the International Monetary Fund, has expressed broad generalities toward the need of fiscal reforms. It is hoped that Lagarde will not be a laggard in the birth of the “EuroTarp” by whatever stimuli to be applied.

Euro Hitting New Lows
The weak Euro is attracting foreign capital to purchase cheap European natural resource assets. Our research team is looking for undervalued gold assets in the Eurozone as these countries are looking to rapidly develop mines to provide high paying jobs and growth. The Euro has broken the 2011 lows as Merkel and Sarkozy meet to rescue the moribund Eurozone economy.
It is important that a coherent plan of attack be formulated rather than the indiscriminate printing of Euros(FXE), which we are currently witnessing. The Euro is rapidly losing value. This procedure of currency devaluations is counter-productive unless corrective measures are instituted such as serious spending restraints, permanent tax rate cuts and regulatory relief. In plain language, the Europeans and the Americans can’t print more dollars (UUP) without building on a base of budgetary restraint.
Recovery In Rare Earths, Uranium and Precious Metals
How does this affect our selected precious metals stocks(GDX), rare earths (REMX) and uraniums(URA)? This week the rare earths are emerging from their second half 2011 slumber. It is felt that they will lead the upcoming recovery. This week certain of the rare earths are producing impressive percentage gains as an augury of things to come.
China is playing a dual role not only for their own domestic needs but in establishing a quota system for exports to other nations. This emphasizes the importance for the West and Japan to establish an independent role in their own destiny. No matter what happens in the pending appeal with China at the World Trade Organization, The West has learned a valuable lesson in geopolitics as the external industrial nations recognize the importance of rare earth independence.
The uranium sector is enjoying a profitable week as well. No other area has had to come up from taking a count so many times. The press has obscured, misrepresented and sensationalized the true story about the role of nuclear energy(NLR) in a modern, industrial world. The media has relegated uranium mining to the status of selling newspapers and TV commercials. The truth be damned. Imagine when the true story is finally told. Not once have the talking heads mentioned that reactors that are being built are portable, economical and safe. The truth can not be suppressed forever.
Swiss Franc Scandal Highlights Investing In Tangible Assets
Important news is just coming over the wire. The Swiss National Bank Chief has resigned in shame after it is revealed his wife was selling Francs (FXF) to buy U.S. Dollars (UUP) long before the central bank sold Francs to slash the value. The Swiss franc is rising against the dollar. One wonders how many others were involved in that trade to push the weak dollar higher?
In conclusion, our sectors and recommendations are once again emerging from their long bases. Reiterating the long ascendance of these sectors especially in light of all the bullish forces, patience is paramount albeit painful. We have been advising our readers that this correction in commodities would be far from terminal and that it represents a classic buying opportunity.
Stay tuned to my free newsletter by clicking here…
Disclosure: Long GLD, SLV, GDX

Gold Up 5% on Week in Euros as “Recession Data” Hit Europe, US “Can’t Decouple” from Eurozone Crisis Despite Positive Jobs News

BullionVault — Fri, 06 Jan 2012 23:11:42 +0000

Friday 6 January 2012, 09:00 EST

Gold Up 5% on Week in Euros as “Recession Data” Hit Europe, US “Can’t Decouple” from Eurozone Crisis Despite Positive Jobs News

THE DOLLAR cost of buying gold hovered around $1620 an ounce Friday morning London time – becoming a bit more volatile following the release of US employment data but failing to establish a definite direction – while stocks and commodities edged higher.

Silver prices meantime eased around lunchtime, hitting $29.15 per ounce.

On currency markets the Dollar rallied – pushing the Euro down further – after the nonfarm payrolls release showed the US economy added 200,000 private sector non-agricultural jobs in December.

The US unemployment rate fell from 8.7% in November (revised up today from 8.6%) to 8.5%.

From its high above $1.30 on Tuesday, the Euro meantime has since fallen 2.5% against the Dollar.

By Friday lunchtime the price of buying gold in Euros – which touched a 4-week high of €40994 per kilo (€1275 per ounce) looked set for a weekly gain of over 5%.

The Dollar cost of buying gold meantime was headed for a weekly gain of around 3.6%.

“A close above the 200 day moving average at $1632 is needed to shift the market [for buying gold] to Neutral from Bearish,” reckons Russell Browne, technical analyst at bullion bank Scotia Mocatta.

“While gold is pushing towards its 200 day moving average at $1633, we are not convinced that it can sustain a break above this level yet,” adds Standard Bank commodities strategist Walter de Wet.

“Liquidity remains locked up as the European interbank market continues to malfunction…in the physical market, we continue to see steady buying of gold. But this demand is more likely to provide support for gold on dips below $1600 rather than push it substantially higher.”

Friday’s Asian trade saw demand for buying gold in physical form, according to one Shanghai trader.

“Liquidity is back in the market,” said the trader.

“With the Europe outlook still grim, investors would prefer to put their dollars in some safety assets, such as gold.”

In the US, however, the volume of gold to held to back shares in the world’s largest gold ETF, the SPDR Gold Trust (GLD), has not changed since before Christmas.

This contrasts with the world’s biggest silver ETF, the iShares Silver Trust (SLV), where steady outflows since the middle of last month has seen the volume of silver bullion held fall to its lowest level since September 2010.

“We expect silver demand to slow during [2012],” says the latest precious metals note from French bank Natixis, citing “reduced investment demand alongside the current weakness in global industrial demand.”

“There have been good data out of the US,” said Jeremy Friesen, Hon Kong-based commodity strategist at Societe Generale, speaking ahead of today’s nonfarm payrolls release.

“But ultimately the US can’t decouple from the European crisis…there are going to be enough reasons to be worried about global growth and the financial system in the next quarter or two, and gold should benefit from that.”

German factory orders fell 4.8% between October and November last year, Bundesbank figures published this morning show.

Retail sales for the 17-nation Eurozone as a whole meantime fell 2.5% in the year to November – compared to a 0.7% y-o-y drop to October – according to official European Union data, while the European Commission’s economic confidence indicator hit its lowest level in over two years last month.

“This data has recession written all over it,” says Martin van Vliet, Eurozone economist at Dutch bank ING.

A report in French newspaper Les Echos suggests the governments of France, Belgium and Luxembourg are considering fully nationalizing Dexia. The three governments pledged last October to guarantee for a decade €90 billion of the bank’s loans, nationalizing its Belgian division.

In Switzerland meantime Phillip Hildebrand, head of the Swiss National Bank – which last year pegged the Swiss Franc to the Euro – has refused to resign after it emerged that his wife bought US Dollars three weeks before the peg was announced.

Here in the UK – where the Pound this morning hit a 15-month high against the Euro – oil company Shell has announced it will close its final salary pension scheme, the last FTSE 100-listed company to do so.

The Sterling price of buying gold hit £1052 per ounce Friday lunchtime in London – 4.6% up on the start of the week.

Hungary’s leader Viktor Orban has expressed support for central bank governor Andras Simor as the government prepares to renew negotiations with the International Monetary Fund and the European Union over a possible bailout. The IMF and EU last month walked away from negotiations after Orban’s government refused to repeal new legislation seen as threatening the central bank’s independence.

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011