Gold Hits New Record Highs, Silver Jumps as Reckless Governments Spur Investment
Commodities / Gold and Silver 2010 Jun 08, 2010 - 06:41 AM GMTBy: Adrian_Ash
THE PRICE OF GOLD held in wholesale 400-ounce bars jumped against all major currencies in London trade Tuesday morning, hitting fresh all-time highs in Dollars, Euros and Sterling as European stock markets extended yesterday's late drop on Wall Street.
Leading economy government bonds also rose, pushing 10-year UK gilt yields back below 3.50%.
Crude oil ticked down towards $71 per barrel, but base metal prices were mixed – with copper falling and aluminum rising – after China's No.1 aluminum producer, Chalco, said market-prices have fallen below the cost of production.
Silver prices also rose, unwinding last week's drop vs. the Dollar and reaching 3-week highs vs. Euros.
"If there is a double dip [recession], it will be a reflection of a long-term economic crisis," said CEO of the GFMS precious-metals consultancy Paul Walker, speaking to Bloomberg from Tokyo today.
"That may be good for gold."
Forecasting a 2010 range of $1050 to $1300 an ounce – with a possible jump to $2000 – Walker believes that "the investment case for gold is going to remain robust for the rest of this year."
"When government monetary and fiscal policy is out of control, that can show up in all sorts of ways," says economic consultant Ed Yardeni, quoted by the San Francisco Chronicle.
"Gold is a hedge against reckless governments."
"With the latest shocks to global markets, currencies and equities, people understand the impact and effects of the financial crisis are very far from over," agrees Jason Toussaint, managing director of the World Gold Council's Exchange Traded Gold business.
"There is sometimes a tactical move into gold, but the greater trend, borne out by the data, is increasing buying of gold for the long-term, rather than as a short term hedge."
As gold prices rose to a new all-time high of $1252 an ounce in late-morning London trade on Tuesday, silver also extended this week's gains, rising above $18.35 an ounce and adding 5.2% for Dollar investors from yesterday's start.
"Silver has apparently decided to don its investment hat this week," says one London dealer, "benefitting from pro-gold sentiment."
"That said, silver is still underperforming gold," says the latest Metal Matters report from bullion bank Scotia Mocatta.
"The gold:silver ratio was last at 1:66 and trending higher. This suggests that silver's industrial attributes are offsetting some of its safe-haven ones."
French, German and Italian investors wanting to buy gold today saw the price rise to €33,800 per kilo – almost 7% above Friday afternoon's one-week low.
European stock markets meantime lost more than 1% on average.
The gold price in British Pounds edged above last month's then-record high of £869.48 an ounce.
By Adrian Ash
BullionVault.com
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Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2010
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