See rest of article below Alerts and Notes.
Investors and some traders have been surprised by the fact that GOLD and PLATINUM prices dropped when China and other countries failed to meet their targets and their currencies declined.After all these resources were supposed to be the final currency which should protect them from such events!
Well all reserve banks world-wide still carry GOLD as a reserve currency so it certainly has value as a basis for paper currencies.
In the past gold went up when paper printed currencies went down,but not of late.Now gold increases as the stock market of a country increases in value.The price increases for all the wrong reasons.So speculators had driven the price up.
The physical demand accounts for about a third of newly mined gold ,reserve banks absorb another third and finally hoarders and speculators hold the rest.The price is unlikely to fall below $900 per ounce as this would have a devistating effect upon governments capital held.
COMMeERZ BANK noted at the beginning of this month that "Monetary turmoil is not easing notably,but accelerating worldwide.The only true value currency out there is gold"
A startling statement to make for a rather conservative institution!I see that some other commentators include precious metals of the platinum group as well.Rhodium and Platinum both could be included as there is not enough gold to satisfy the demand of central banks worldwide.Many institutions feel these metals should back quantitive easing money as such easing can not carry on indefinitely as it devalues currency and leads to quickening of the inflation cycle.
There is a growing surplus of steel and coal starting to develop world wide,caused by industry "jumping the gun" and winding up production before there is a genuine demand for their products.The recession is easing and in time the world will recover,but the recovery is likely to be very slow this year.
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Note 3.Thank goodness Naomi is back! See her technical analysis for derivatives above.
The trade unions are letting us down by repeated wild-cat strikes,which our weak government almost condones.This plus the recession almost brought Angloplat to its knees.Now AGL has to find the funds to re-finance the company again.
Do read the stripping of our assets part 1.
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