New golden standard for chaos in Wall Street?
25-09-2008 newspaperBulls of the gold vindicate themselves. The believers in the gold, ridiculed by the conventional investors due to his unbreakable upward position to the margin of which are the conditions of the market, they feel claimed by the current turbulency of Wall Street. Moved by the worst financial crisis from the Big Depression, the people, with fears for his bank deposits and accounts on the monetary markets have rushed to buy jewels and golden coins.
The advance of the price of the gold over 1.000 dollars the ounce in March was a moment of “I said it to you” for an important group of defense of the metal, Gold Anti-Trust Action Committee (CAT).
The conventional investors consider to CAT like a group of conspiratorial theories, with very few evidences to endorse his argument that the governments, central banks and commercial banks have operated secretly jointly to support down at the cost of the gold.
Although the gold quotes below his record, to lightly less than 900 dollars for ounce, the president of CAT, Bill Murphy, he predicted this week that the proposal of rescue of the financial sector for 700.000 million dollars on the part of the Government of the United States will provide an amazing impulse to the gold because it will feed the inflation and will affect the confidence in the American markets.
“The people, from the average American up to the funds of sovereign wealth, are going to crowd on the minuscule markets of gold and silver”, affirmed Murphy, who supported that the golden metal needed to climb to between 3.000 and 5.000 dollars the ounce for the balance of the market.
Even if the gold was in his minimally post-flotation for 251,70 dollars the ounce in 1999, CAT kept on affirming that the golden metal would exceed his maximum of 1980 of more than 800 dollars.
Last Wednesday, the gold registered his biggest jump of price of a day of the history because the investors left the dollars, the actions and the roles of the Government for a reliable sure refuge.
On Wednesday, the gold quoted the few one to 888,15 dollars for ounce. It has climbed 18 % since on September 11 it touched a minimum of 11 months for 754,70 dollars.
While the oil marked this year a record fitted by inflation and also in nominal terms closely of 150 dollars for barrel, the gold is located far from a maximum fitted by inflation, which the GFMS analysts have located in 2.079 dollars for ounce.
HOARDING
The operators of the metal about the world informed that the biggest consumer has climbed the buy of physical gold, particularly in India, in Middle East, with the proximity of the festivals hindúes and Moslem.
The World Council of the Gold, which is sponsored by the industry, brought strong sales of golden coins and small bars on the American market, particularly on the part of small retail investors.
On the other hand, Eric Harris, co-owner of the jewelry shop of head office in New York Niletti Creations, indicated that it has seen clients selling instead of buying gold to produce of the high price.
“Many of my clients who have been monopolizing his gold are selling it because now it is a good moment to sell golden scrap”, said Harris.
Donald Doyle, executive president of Blanchard and Co pointed out that the sales of the biggest retail signature of rare coins of the United States had been trebled in last two weeks.
“Our business has been more active than never earlier in the history of the company. The people feel that if he cannot even trust in the funds of the monetary market to be absolutely sure, they want to have something even more sure than that”, added Doyle.
In August, a scarcity of the popular coins of gold American Eagle, it had to the Mint of the United States to suspend temporarily his sales.
The tenancy of SPDR Gold Trust, the fund of gold negotiated in bigger bag, they have increased in more than 100 tons to a 724,94 tons record since Lehman Brothers requested protection from the bankruptcy and since the acquisition of Merrill Lynch by the Bank of America was announced on September 15.
NEW STANDARD OF GOLD?
Peter Schiff, global strategist in chief of Euro Cardinal Pacific, which it has promoted in a lot of time to the gold like an alternative investment, said that the plan of salvataje of the Government of the United States might fail.
“It is going to encourage an enormous inflation round, and perhaps finally the world is going to question why the dollar is the reservation currency”, he added.
Schiff, who predicts that the gold will rise to 2.000 dollars next year, affirmed that he believes that the world should return ultimately to the golden standard, under which the central banks tie the value of his currency to that of the metal.
Most of the developed country left the golden standard before the end of the Second World war. The dollar has not been convertible to the gold from 1971.
Philip Gotthelf, publisher of Commodex System and of the Commodity Futures Forecast Service, said that the real fear of the market was that the dollar was costing much less if the American Government decides to print to go out of the entanglement.
“There would prefer to be stranded with hard assets that will always have something of intrinsic value that to run the risk if the Government goes crazy”, added Gotthelf.
25-09-2008 Reuters
