Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Jump as GDP Data Reveal US Inflation Rise, Economists Urge QE

Commodities / Gold and Silver 2010 Oct 29, 2010 - 10:04 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD rose sharply at the start of New York trade on Friday, jumping 1.2% from an earlier low in London to hit $1352 per ounce – some 1.8% higher from last week's finish – as new data showed weaker-than-expected US economic growth, with much stronger-than-forecast price inflation.

World stock markets had already sagged before the Commerce Dept. said GDP expanded by 2.0% annually between July and Sept.


Third-quarter domestic inflation, in contrast, beat analyst forecasts by rising to 2.3% per year.

The gold price in Euros also rose on the news, hitting its own 8-session high above €31,200 per kilo.

Silver bullion touched $24.25 per ounce, adding nearly 3.7% from last weekend.

"Naysayers point to gold's price and see a bubble, without understanding that the only acceleration that is taking place is in the rate of decline of paper currency," writes John Hathaway of Tocqueville Asset Management at Bloomberg today.

Bearish analysts – though wrong – actually help investors, says Hathaway. Because they help keep prices from shooting too high, too fast, giving new buyers the opportunity to buy gold more cheaply.

"Anti-gold pundits provide a great service to those who grasp this historical moment...[where] we are past the point of no return.

"Quantitative easing may well become a way of life."

Urging $2 trillion of QEII, Jan Hatzuis at Goldman Sachs says that "The Dollar needs to fall a lot further from here if indeed the Fed sees the Dollar as one of its key policy levers for preventing [deflation]."

Citigroup's chief economist in London, Willem Buiter, meantime calls Japan's recent QE announcement "far too small to achieve anything", urging money-creation 20 times larger – some $1.2 trillion – and advocating time-limited gifts from the central bank of ¥100,000 for every adult.

"If Japanese consumers refuse to spend the check and save it instead, either attach an expiry date to the cheque...or send another check, this time for ¥1,000,000. Repeat this, adding zeros, until the consumer gives in and starts spending."

Japan's Nikkei 225 stock index lost 1.8% on Friday, closing at a 7-week low.

Tokyo gold futures meantime added 0.7%, rising to ¥3514 per gram – well over three times its price from when the Bank of Japan began quantitative easing in March 2001.

The Nikkei stock index closed Friday 30% down from that date.

"There is a strong case for an allocation to gold as an asset class on its own merits," says the latest quarterly report from market-development group, the World Gold Council.

"Gold is part commodity, part luxury consumption good and part financial asset, [so] its price does not always behave like other asset classes...making it very useful in periods of financial distress."

Analyzing how gold tends to rise when US stock markets fall sharply, "Investors who hold gold only in the form of a commodity index are likely to be under-allocated," says the WGC's report, "because gold's weight in typical benchmark commodity indices tends to be small."

European shares also fell on Friday, and New York stock futures pointed lower, after new data showed a stronger-than-expected pace of consumer-price inflation across the Eurozone, but no change in the 16-nation currency union's 10.1% unemployment rate.

German retail sales fell 2.3% last month from August.

Net lending to UK consumers meanwhile grew by just £400 million – the smallest Sept. total since Bank of England records began in 1987.

Now suffering negative real returns to cash – after inflation – for 28 months running, UK savers wanting to buy gold today saw the price head into the weekend some 0.4% lower from last Friday at £843 per ounce.

By Adrian Ash

BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

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

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.


© 2005-2022 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