DAILY PRICES Today’s Gold Prices: USD 1,154.25, EUR 999.35 and GBP 730.56 per ounce. Yesterday’s Gold Prices: USD 1,153.50, EUR 1,005.93 and GBP 734.34 per ounce. (LBMA AM)
Gold in USD – 1 Year Yesterday, gold rose initially prior to selling in the futures market saw gold fall $6.30 to $1153.10 in New York and ended down just 0.5%. Silver slipped 50 cents to $14.78 per ounce. Gold in euros and sterling fell by slightly more but still outperformed falling stock markets. Gold performed well considering the stock market bloodbath yesterday. The fact that it is was only marginally lower despite market carnage bodes very well indeed for the coming months.
Frequently, gold is correlated with equities in the very short term and can fall when stock markets suffer sharp one day corrections. However, over the month and the quarter, gold has an inverse correlation with equities. Gold appears to have once again anticipated the crisis and is acting like a safe haven in recent days – just at the moment when western investors need a safe haven and wealth preservation most. We appear to be on the verge of new bear market in stocks and as we have been warning for some months now there is a real risk of a 1929 or 1987 style crash. It is time to take stock and reduce allocations to equities and increasing allocations to cash and gold bullion.
Gold Glimmers as Global Market Fear Grips Investors Gold last week broke above its 50-day moving average as a fresh round of negative news from around the globe rekindled investors’ interest in the yellow metal as a safe haven.
The ‘Fear Trade’, it seems, is in full force. Below are just a few of the recent news items that have made some investors skittish, which has supported gold prices:
China, the world’s second-largest economy, continues to slow. Its preliminary purchasing managers’ index (PMI) reading, released on Friday, came in at 47.8, a 77-month low. This follows China’s decision to devalue its currency, the renminbi, close to 2 percent. For the first time in a year, the Shanghai Composite Index fell below its 200-day moving average.
Crude oil is on an eight-week losing streak, the longest in 29 years. West Texas Intermediate (WTI) slipped below $40 per barrel in intraday trading Friday, the first time it’s done so since 2009.
U.S. stocks are undergoing an ugly selloff. They just had their worst week since September 2011 and are on track to post their worst month since May 2012. The Dow Jones Industrial Average, down 10 percent since its all-time high, is nearing correction territory. All 10 S&P 500 Index sectors were off last week.
We can also add to this list the high levels of margin lending on the New York Stock Exchange (NYSE) right now. At the end of every month, the exchange discloses margin amounts, and it appears that everyone is leveraged. Real margin debt growth since 1995 is twice as much as real S&P 500 growth.
Frank Holmes is a leading expert on gold, precious metals and the natural resource market. He is CEO and chief investment officer at U.S. Global Investors Inc.. He is a regular commentator on the financial television networks CNBC, Bloomberg and Fox Business, and has been profiled by Fortune, Barron’s, The Financial Times and other publications. He came up with the concept of the ‘fear trade’ and the ‘love trade’ in gold. This simply means many investors particularly in the West buy gold on ‘fear’ or concerns about risks in markets but that there are also many who buy gold due to their cultural affinity and a ‘love’ of gold – particularly in the Middle East, India, China and most of Asia. Holmes latest research piece on gold is timely and as ever well worth a read and is published on Forbes here
“Frequently, gold is correlated with equities in the very short term” said GoldCore – MarketWatch Gold holds below seven-week high as dollar, equities recover – Reuters Dow Industrials Tumble Nearly 600 Points Amid Global Market Selloff – The Wall Street Journal China share plunge smacks world markets; S&P, Nasdaq in correction – Reuters Chinese Stocks Crash Again to Extend Biggest Plunge Since 1996 -Bloomberg
Gold Glimmers as Global Market Fear Grips Investors – Forbes Peak Gold Is Looming – Bloomberg SWOT Analysis: Will Gold’s Oversold Rebound Continue? – GoldSeek.com AEP: China’s market Leninism turns dangerous for the world – The Telegraph “Hang On To Your Gold” – Stepek – MoneyWeek
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