Gold Advances to Record High, Gains ‘Like There Is No Tomorrow’

gold-storms-above-1200 gold-one-year

Messages:

1. The Fed cannot control the created excess liquidity.

2. The US dollar is about to enter into a real currency crisis.

3. Obamanomics is a complete failure. The US will default on its debt.

4. Some people know or speculate that COMEX will run out of gold.

Gold and Silver are about to go ballistic.

(Now only a stock market collapse with a strengthening dollar could lead to falling gold prices. This would be your last chance to buy gold and silver at cheap prices. Maybe gold & silver (and also other commodities) will just continue to rise while everything else collapses around them.)


gold-stoms-to-another-record-high
Gold ingots are stacked at the Argor-Heraeus SA gold producing and refining plant in Mendrisio, Switzerland

Dec. 2 (Bloomberg) — Gold surged to a record for a second day as investors stepped up purchases to protect their wealth against a slumping dollar. Shares of producers including Newcrest Mining Ltd. also advanced.

Bullion has risen 38 percent this year as the dollar has dropped 8.5 percent against a basket of six major currencies. Central banks, pension funds and individuals have bought gold as a hedge against potential currency debasement and inflation. The precious metal is climbing “like there is no tomorrow,” David Thurtell, an analyst at Citigroup Inc., wrote in a report.

“Gold prices will go up, as will other commodities,” Mark Mobius, chairman of Templeton Asset Management Ltd., said in a Bloomberg Television interview today from Hong Kong. “It’s basically the devaluation of currencies, which is ongoing and will be ongoing for many years to come.”

Spot gold climbed as much as 1.6 percent to $1,215.85 an ounce, and was at $1,214.39 at 1:52 p.m. in Singapore. Gold for February delivery in New York climbed to an all-time high of $1,216.90. Silver advanced to the highest since July 2008.

“It’s really a dollar story,” said Jerry Yoshikoshi, a senior economist with Sumitomo Mitsui Banking Corp. in Singapore. “As long as the U.S. authorities neglect a weak dollar, gold prices remain elevated.”

The Federal Reserve has kept benchmark interest rates close to zero since December in a bid to revive lending after the worst financial crisis since World War II. The U.S. government has boosted spending to combat the recession, pushing the nation’s marketable debt to more than $6.9 trillion.

The Dollar Index, a six-currency gauge that includes the yen, was little-changed today. Against the euro, the U.S. currency traded near a 16-month low.

‘Print Too Much’

“The main reason is that they continue to print too much money, and people don’t trust governments and banks,” said Jurg Kiener, chief investment officer at Swiss Asia Capital Pte in Singapore. “We keep buying” gold every day, said Kiener.

Newcrest Mining, Australia’s biggest producer, rose 5 percent to A$39.26 on the Australian stock exchange, while Sino Gold Mining Ltd. climbed 5.9 percent and Lihir Gold Ltd. gained 4.2 percent.

Commodity funds pulled in more than $1 billion in investments for a second straight week in the seven days to Nov. 25, according to an e-mail from EPFR Global yesterday. That pushed inflows for the year to $14.6 billion, it said.

India, Mauritius and Sri Lanka have this quarter bought more than half the 403.3 metric tons of gold that the International Monetary Fund plans to sell to bolster its balance sheet and boost lending to low-income nations.

China’s Holdings

China should increase bullion reserves to 6,000 tons in the next three to five years, the China Youth Daily said on Nov. 30. The report cited Ji Xiaonan, chairman of the supervisory committee at the state-owned Assets Supervision and Administration Commission. China has increased its holdings to 1,054 tons since 2003.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, increased by 0.61 ton to 1,130.60 tons as of yesterday, according to figures listed on the company’s Web site.

“Gold continues to push higher,” Thurtell, the analyst at Citigroup, wrote in the report, which was dated yesterday. “Investor demand remains strong with spurts of profit-taking.”

Gold’s so-called relative strength index has held at more than 70 for 14 straight days. That’s the level that some traders use to suggest that a decline in an asset is likely.

Barrick Gold Corp., the world’s largest producer, said yesterday that it completed the elimination of its hedges, gaining full leverage to the price. The stock has risen 40 percent over the past year.

Silver for immediate delivery rose as much as 1.4 percent to $19.36 an ounce, gaining to the highest level since July 2008. Platinum climbed as much as 0.9 percent to $1,494.75 an ounce, and palladium rose 2 percent to $388.75 an ounce.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

Last Updated: December 2, 2009 00:53 EST

Source: Bloomberg

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