Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold at $890 on Merrill Lynch $15billion Mortgage Loss

Commodities / Gold & Silver Jan 11, 2008 - 08:50 AM GMT

By: Adrian_Ash

Commodities

SPOT GOLD PRICES for immediate delivery held 1% below their new overnight records in London early on Friday, flipping around $890 per ounce as the US open drew near.

"Yesterday the Gold Market looked bearish on the day [but] after the initial dip we had a rally of $30," says this morning's note from the metals dealers at Mitsui in Sydney .


"Today it looks as though $900 should be tested – but beware, it is a Friday after all!"

Thursday's sharp rally – and the following surge to almost $898 per ounce – came after Ben Bernanke, chairman of the Federal Reserve, signaled further cuts to US interest rates that look sure to destroy the purchasing power of the Dollar further still.

Then this morning the New York Times said Merrill Lynch, the largest US investment broker, is about to announce new losses on its mortgage investments totaling $15 billion.

"People are surprised at the huge loss," said one Tokyo bond-fund manager to Bloomberg. "The equity market collapsed and the bond market rallied."

By lunchtime in London the price of two-year US Treasuries had risen to push their yield down to 2.67%, a three-year low that's sharply negative after inflation. The FTSE100 share index stood 0.7% lower for the day after the Japanese Nikkei had earlier finished the week another 1.9% lower.

Tokyo 's leading stock market index has now dropped one-tenth of its value since the start of this month.

"The outlook for real activity in 2008 has worsened," Bernanke said in Washington yesterday. Evoking the easy-money spirit of Alan Greenspan, "we stand ready to take substantive additional actions as needed to support growth and to provide adequate insurance against downside risks," the current chairman went on.

The Dollar immediately dropped 1.5 cents to the Euro, but that failed to spot the Gold Price in Euros also shooting higher.

By early afternoon in Frankfurt on Friday, gold was trading above €603 per ounce – more than 1.7% higher from the same time on Thursday in a clear challenge to the European Central Bank's much-touted "anti-inflation" stance. Ben Bernanke's comments seemed to contrast sharply with yesterday's statement from ECB chief Jean-Claude Trichet, who kept Eurozone rates on hold at 4.0%.

Trichet told a press conference after the ECB's decision that it remains in a state of "total alertness" on the risk of wage demands pushing inflation higher. But Trichet's jaw-boning is no substitute for tight money; money-supply growth in the 15-nation currency zone now stands at a three-decade record, and the Gold Price for German, French and Italian investors has gained nearly 10% in the last month alone ( Parlez-vous central banking? Read more on Trichet, the Euro & Gold here... )

"People are looking at the geopolitical calendar in 2008, and they're looking at Iran and at what's happening in Pakistan ," says Jonathan Barrett of Commodity Broking Services in Sydney .

"They're [also] looking at inflation out of China and India ; those economies still are growing. Add a little bit of financial risk – actually a lot of financial risk – in America , and I think that's a concern."

Bank of America said today it is buying Countrywide for $4 billion in stock. The No.1 US mortgage lender is rumored to be on the very verge of bankruptcy.

"I also think that people now have the means to invest in gold," Barrett added on CNBC's Squawk Box today. "Remember in China we've now got a new gold [futures] market there.

Meantime "central banks looked at gold a long time ago and said they were going to get out of gold, now they're getting back in," Barrett went on, citing the central banks of Russia , China , South Africa and the Middle East as gold buyers right now.

In the broader commodities market today palm oil futures and Malaysian soybean prices hit all-time records. The European Cocoa Association said its members' output fell to a three-year low at the end of 2007, down 2.9%.

Copper prices continued to rise in London , pushing towards their best weekly finish since Sept. after new data showed a sharp increase in demand from China – the world's largest consumer of the metal.

But oil prices, in contrast, continued to fall, adding to Thursday's 2% loss and heading for the sharpest week-on-week fall since Nov. after China reported a drop in its rate of money-supply growth.

The broad M2 measure of China 's money supply rose by a mere 16.7% in the year to Dec. said the People's Bank this morning. Down from 18.5% in Nov., the rate of monetary inflation in the world's fastest-growing economy still slipped to only a seven-month low, however.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2007

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.

Adrian Ash Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules