Gold Spot gold recovered somewhat from yesterdays sell off and was up some 0.75%, trading at $653.50/653.80an ounce as of 1215 GMT.
Gold along with global stock markets fell sharply yesterday. Spot gold was down from $668.90 to $648 or a drop of 3.2%.
Despite the drop, gold is again proving resilient in the light of the wholesale liquidation in other markets and remains up 2.5% YTD (year to date), up 3.75% over the last 12 months and up nearly 108% in the last 5 years. It has thus easily outperformed the world's stock markets both on a monthly and yearly basis. This can be seen in our Performance Table which shows gold's outperformance over the medium and long term.
Gold's hourly and daily movements should be ignored by long term value investors. As in other financial markets, they are generally affected by short term speculative money from the likes of hedge funds and the paper players which can exacerbate short term movements in the gold price. Long term investors should be wary of short term movements and try and adopt the Warren Buffet investment philosophy of investing in undervalued invests for the long term. Gold's fundamentals remain extremely sound as was shown in the extremely robust physical demand seen in Q2 '07. None of the strong fundamental reasons for owning gold in the last 6 years have dissipated, indeed many have become even stronger.
In the last 30 days the FTSE is down 12.47%, S&P is down by 8.92% while gold is only down some 1.95% or the losses incurred in yesterday's sell off.
Gold's safe haven attributes are not seen on an hourly or daily basis but rather over the medium to long term.This is illustrated in the table below compiled by Sam Stovall, Chief Investment Strategist at Standard & Poor’s. It shows gold's excellent performance over the medium to long term during stock market corrections and crashes.
Gold's Performance as a Safe Haven Asset An example of gold's historic role as a safe haven asset is seen in the following data. The industry performance of Physical Gold Versus the S&P 500 during eleven stock market declines of 15% or more in the Post-War period (since 1946).
Correction Date
S & P 500
Physical Gold
Gold Mining Shares
May 46 - May 47
-23
0
-28
June 48 - June 49
-17
0
+3
July 57 - Oct 57
-15
0
-18
Dec 61 - June 62
-22
0
-3
Feb 66 - Oct 66
-17
0
-10
Nov 68 - May 70
-28
+4.11
-35
Jan 73 - Oct 74
-41
+142.87
+144
Sept 76 - Mar 78
-16
+60.72
+43
Nov 80 - Aug82
-19
-34.58
-60
Aug 87 - Dec 87
-27
+7.90
-22
July 90 - Oct 90
-15
+2.54
-8
Source: Sam Stovall, Chief Investment Strategist at Standard & Poor’s, featured in 'The Bear Book - Survive and Profit in Ferocious Markets' by John Rothchild Note: Gold price was "fixed" during the first few episodes, hence physical gold registered no gains and no losses.
Some exposure to gold should be included in all diversified portfolios. In the same way that every major Central Bank in the world continues to maintain huge reserves of gold bullion in order to help prevent systemic or monetary crisis, so too should private investors invest, save and own gold. A good rule of thumb would be a minimum allocation of around 10% to gold and related gold-investments. The wise old Wall Street saying - "Put ten percent of your money in gold and hope it doesn’t work", is particularly applicable in today's fast changing and increasingly uncertain environmental, economic, financial and geopolitical world.
Silver Spot silversold off very sharply and was down 9.9% to $11.40. It has bounced somewhat and is up 2.7% this morning to $11.70/ $11.72 an ounce (1215 GMT). While technically silver is now very damaged, the fundamentals on silver are as strong as ever and this will likely be seen as one more volatile sell off in a multi year secular bull market.
PGMs Interestingly, the PGMs remained resilient yesterday despite the sharp sell of silver and to a lesser extent gold. Platinum was trading at $1240/1244(1215 GMT). Spot palladium was trading at $330/336an ounce (1215 GMT).
FX and Gold Risk aversion continues with another large stock market sell-off in Asia overnight. Yesterday there was concern after the largest mortgage lender in the US warned that it had drawn down its entire credit line as the credit squeeze limited its access to cash. Speculation of a US interest rate cut and talk that Bear Stern (one of the largest US mortgage bond underwriters) would get funding from a Chinese bank helped the Dow off it lows, however.
The swiss franc and the yen, though, have continued their upward march overnight. The yen hit a 14 month high against the dollar, in volatile trading conditions, as carry trades further unwind. The high yielding NZD and AUD continue to be particularly badly hit, with the NZD down around 9% against the yen and 5% against the dollar in recent sessions. Meanwhile, the Reserve Bank of Australia has intervened to buy the AUD to restore some liquidity (with the AUD at its weakest against the yen since October).
With most of the action in the yen against high yielding currencies, the euro, meanwhile, traded in a relatively narrow band to the dollar overnight. The dollar yesterday gave up early gains against the euro following data showing that US housing starts fell far more than had been anticipated in July. Today’s economic calendar is relatively quiet with the US Michigan sentiment survey the main feature. However, economic data continue to play second fiddle to global credit concerns and the news flow about the US sub-prime market.
Oil U.S. crude was up 64 cents at $71.64 a barrel at 11:15 GMT. London Brent crude was up 62 cents at $70.39. Oil roseas Hurricane Dean strengthened on a course that could take it towards Gulf of Mexico rigs and refineries, countering renewed weakness in European equities. The hurricane threatened to become a dangerously powerful storm as it moved towards the Caribbean and aimed for Mexico's Yucatan Peninsula or the Gulf of Mexico, home to about a third of U.S. oil output.
Stocks Stock markets plunged around the worldon more clear evidence that what we are experiencing is no longer merely a US subprime issue rather a global credit crunch. There are persistent worries about U.S. housing loan problems and potential damage to the global economy. In London the FTSE 100 shed 250.4 points to close at 5,858.9. But US shares staged another mysterious, dramatic recovery in late trading.The The Dow Jones plunged 343 points at its worst, but ended the day just 15.69 lower at 12,845.78.
There is speculation by some traders and analysts that the Working Group on Financial Markets may be intervening in the US stock market, www.wikipedia.org/wiki/Working_Group_on_Financial_Markets , in order to prevent a stock market crash. Tokyo stocks tumbled for a third day on Friday with the key Nikkei index losing more than 5 percent and closing at its lowest level in 12 months. The 225-issue Nikkei Stock Average fell 874.81 points, its largest point drop since April 2000, or 5.42 percent, ending at 15,273.68, its lowest finish since Aug. 7 last year.
European markets started flat to down but have started to sell off and as of 1200 GMT the FTSE was down 0.37%.
Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252. Registered for VAT under number 6397252A. Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator
Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors’ interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.
All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.
Fair Use Notice: This newsletter contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of financial and economic significance. At all times we credit and attribute the copywrite owner and publication.We believe this constitutes a 'fair use' of any such copyrighted material as provided for in Copyright Law. The material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for economic research purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Gold Investments Tower 42, Level 7 25 Old Broad Street London EC2N 1HN United Kingdom Ph +44 (0) 207 0604653 Fax +44 (0) 207 8770708 Email info@goldinvestments.org Web www.goldinvestments.org
Mission Statement Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth. We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.
Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.
The content on this site is protected
by U.S. and international copyright laws and is the property of GoldSeek.com
and/or the providers of the content under license. By "content" we mean any
information, mode of expression, or other materials and services found on GoldSeek.com.
This includes editorials, news, our writings, graphics, and any and all other
features found on the site. Please contact
us for any further information.
Live GoldSeek Visitor Map | Disclaimer
The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy
or completeness of the information (including news, editorials, prices, statistics,
analyses and the like) provided through its service. Any copying, reproduction
and/or redistribution of any of the documents, data, content or materials contained
on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC,
is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be
liable to any person for any decision made or action taken in reliance upon
the information provided herein.
