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Gold in backwardation
Unlike other commodities, gold very rarely goes into backwardation: This only occurs when 1) The market fears a collapse in the currency., and/or 2) The market is worried about counterparties making good on their promise to deliver gold (which was briefly the case in 1999, when the Washington Agreement was announced and shorts were squeezed).
This morning, gold officially went into backwardation for the first time since the announcement of the Washington Agreement in 1999, which sent gold shorts scrambling to find physical metal after the world’s major central banks agreed to limit sales of gold going forward and ending…
Why the Fall in the Gold Price When Physical Gold Remains in Huge Demand?
“Why was gold down so sharply yesterday?” asks gold guru Jeff Nichols of American Precious Metals advisers – “and this in the face of reportedly record demand from investors for bullion coins and small bars?”
This seeming disparity in the overt supply demand situation looks like an anomaly, but Nichols points out that news that European central banks sold 7.6 tons of gold in the week ending October 10th has certainly been a heavy burden on the price and helps explain why the metal could not move higher last week and, if selling has continued, in the past few days.
But, Nichols…
17Oct2008 | The Gold Report | Comments Off | ContinuedAs the Credit Crisis Deepens, There Are Still Many More Questions Than Answers
Is there any end in sight? Will the G7 provide strong actions (or statements of confidence) to support the global markets? Are these efforts by the world’s central banks helping or simply scaring investors? Should more regulatory actions be taken? Should exchanges suspend trading temporarily (as some suggest) until calmer heads prevail?
With Lehman Brothers Holdings Inc. (OTC: LEHMQ) gone, investor worry shifted to Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) and both stocks plunged accordingly. While Japan’s Mitsubishi UFJ Financial Group Inc. (ADR: MTU) still claimed to be moving forward with a deal that would bring Morgan a badly needed $9 billion capital infusion,…
13Oct2008 | Money Morning | Comments Off | ContinuedCentral Banks Attempt to Boost Liquidity as Money Market Melts Down
Central banks yesterday (Thursday) launched a coordinated effort to flood global money markets with U.S. dollars in hopes of easing strained financial systems in danger of freezing up entirely. However, many analysts see this as only a short-term solution that will lower overnight lending rates but fail to assist financial institutions with longer-term cash needs.
In a statement released at 3 a.m. yesterday morning in Washington, just as the markets opened in Europe, the U.S. Federal Reserve announced that it had authorized a $180 billion expansion of its swap credit lines, allowing banks to borrow more dollars at a lower rate.…
19Sep2008 | Money Morning | Comments Off | ContinuedThe Economic Tables Have Turned
What goes around, comes around…
Every country in the world has had to put up with finger wagging and scolding from U.S. officials. The U.S. economy was the world’s best for so many years – and American experts, government officials, professors and consultants never got tired of saying so.
But now…as the Rolling Stones put it… “Tables turn and now her turn to cry.” Now, the tears are coming from the United States; the foreigners are doing the scolding.
Bloomberg reports that U.S. housing starts are at their lowest level in 17 years. Housing prices are going down too, while consumer prices go…
19Jun2008 | Money Morning | Comments Off | ContinuedHSBC Chief Calls for Tougher Inflation Fight, Industry Changes
The chief executive officer of HSBC Holdings PLC (ADR: HBC), Europe’s biggest lender, today (Tuesday) called on the U.S. Federal Reserve and other central banks to make fighting inflation a priority.
“Inflation is a long-term problem because there is no long-term will to solve it,” Chief Executive Officer Michael Geoghegan said during an informal shareholders meeting in Hong Kong.
He went on to criticize central banks that have kept interest rates low in response to curtailed economic growth and weak housing markets. But due in part to low interest rates, inflation has escalated as costs for food and energy soar, dampening consumer…
27May2008 | Money Morning | Comments Off | Continued
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