Thursday, March 3, 2011

Gold hits record $1,437 as Mideast simmers

From Trade Arabia:

Gold hit a record high above $1,437 an ounce on Wednesday as violence in the Middle East and North Africa supported interest in the precious metal as a haven from risk, and as US oil prices jumped above $100 a barrel.

Spot gold was bid at $1,435.65 an ounce at 1522 GMT against $1,433.70 late in New York on Tuesday, having earlier peaked at an all-time high of $1,437.97. The metal fixed at $1,435.50 an ounce at 1500 GMT.

US gold futures for April delivery rose $5.10 to $1,436.30, after hitting a record $1,439 earlier.

Gold is building on a 6 percent rise in February, its biggest one-month climb since August. This came on the back of unrest that unseated leaders in Tunisia and Egypt before spreading to Libya, Bahrain, Yemen, Oman and elsewhere.

'(There is) a combination of reasons for (the rise in) gold, but primary at the moment are strong oil and weak equities -- basically geopolitical,' said Simon Weeks, head of precious metals at the Bank of Nova Scotia.

'I think we see $1,450, and that's probably enough,' he added. 'Any good news from the Middle East will see a pullback to $1,400.'

Muammar Gaddafi launched an offensive to retake territory in Libya's east on Wednesday, sparking a rebel warning that foreign armed forces might be needed to 'put the nail in his coffin' and end his long rule.

The United States has sent warships towards Libya and Secretary of State Hillary Clinton has said the country and its Nato allies are still considering a 'no-fly' zone over Libya, though Western states appear hesitant to stage an intervention.

In opening remarks to a meeting of Arab foreign ministers in Cairo on Wednesday, Iraqi Foreign Minister Hoshiyar Zebari said the Libya crisis is an internal Arab affair and foreign powers should refrain from any intervention.

Violence in the region cooled appetite for assets seen as higher risk, like stocks, and boosted so-called safe havens like German government bonds, the Swiss franc and gold.

It also fuelled further gains in oil. Brent crude rose towards $116 a barrel on Wednesday after settling at a near 2-1/2 year high, while US crude edged above $100.

Rising oil prices are set to support gold, analysts said, if they look likely to curb global growth. 'They could very well impact (growth in) Europe, the United States as well, and indeed China,' said VM Group analyst Carl Firman.

'That will give rise to uncertainty, it will lower demand predictions for, for instance, copper, and where it knocks industrial metals and equities, gold will probably benefit.'

Elsewhere silver rose to a peak of $34.87 an ounce, its strongest level since early 1980, before edging back to $34.81 an ounce against $34.66.

Libyan update - Amazing footage of AlJazeera film crew getting bombed

Marc Faber - Precious Metals are true currencies

LONDON (Commodity Online): Global investment analyst Marc Faber says the best and true currencies available in the world today are not US dollar or Pound, but precious metals such as gold, silver, platinum and palladium.

Faber, who is famous for his prediction of the US stock market crash in 1987, said that commodities, especially gold and silver will be the wise investment options for people in the wake of rising inflation and troubled economies around the world.

Faber, who is the publisher and editor of Gloom, Boom & Doom Report, said that if there is a war, gold and silver would be desirable investments to hold.

Faber recommends investors to accumulate gold in response to money supply inflation policies of the U.S. Federal Reserve—policies that have contributed to rapidly escalating commodities prices since the introduction of these unprecedented monetary measures in March 2009.

In his discussion with Prison Planet radio host Alex Jones, Faber said he anticipates the Fed to announce further “quantitative easing” initiatives before the expiration of the Fed’s latest “QE” initiative, QE2, which expires in June.

Faber argues that the gold price is signaling to the market that the U.S. dollar is “no longer a credible unit of account” due to the Fed’s QE plan of purchasing mortgage-backed securities and surplus U.S. government debt not absorbed by the market.

The European Commission has embarked on similar policies to the U.S. Fed regarding the euro—the world’s second-largest reserve currency—and similarly cannot be trusted to maintain the purchasing power of its currency either, Faber believes.

Faber said that the only true currencies that exist today are gold, silver, platinum, and on

Libyan update

Gold Buying by China Jumps as Investors Seek to Protect Wealth, UBS Says

From Bloomberg:

Gold purchases in China, the world’s largest producer, climbed to 200 metric tons in the first two months of 2011 as faster inflation boosted consumer demand, according to UBS AG, which said the price may gain to $1,500.

“China is the big buyer,” Peter Hickson, global commodities strategist at Switzerland’s largest bank, said by phone yesterday, without giving a comparable figure for 2010. The estimate for the two-month period compares with full-year consumer demand from China of 579.5 tons for last year, according to the World Gold Council, a producer-funded group.

Bullion, which rallied 30 percent last year, surged to a record yesterday as uprisings in the Middle East, quickening inflation and currency debasement boosted global demand. China’s consumer prices rose 4.9 percent in January from a year earlier, exceeding policy makers’ 4 percent ceiling for a fourth month.

“Chinese interest is huge,” said Peter Tse, Hong Kong- based head of precious metals at Bank of Nova Scotia. “Demand for physical gold and imports has increased substantially” due to the Lunar New Year on

Martin Armstrong - The World Revolution and the Markets

The latest musing by the cycles guru, Martin here