Friday, June 28, 2013
Tuesday, June 25, 2013
Some analysts believe that gold is now in a vicious circle, the decline in encouraging investors to liquidate ETF (investment funds backed by physical gold stocks). Thus, the most important of these funds, has seen its shares fall below 1,000 tons of gold this week. However, these new gold ETF disbursements weigh themselves on courses, racing somehow the machine. Meanwhile, physical demand is affected by the measures taken by the Indian government. The authorities have indeed raised the customs duties on the yellow metal, while the rupee is at a record low against the dollar. Now, gold imports will be allowed only for purposes of jewelry making. In addition, importers must now pay for their purchases in cash, without payment facility. India believes that these imports represent a significant portion of its current account deficit. A policy should reduce gold imports during the month of June, while India is the world's largest consumer of the precious metal. Finally, on the London Bullion Market, an ounce of gold finished at $ 1,295.25 at auction Friday night, against 1391.25 dollars at the end of last week.
Wednesday, June 19, 2013
Monday, June 17, 2013
The reason is simple: when the monetary base explodes, the velocity of money slows as a result of the accumulation of liquidity by banks as excess reserves. The reduction of public and private debt keeps growing global demand below that of the offer. Companies therefore have little flexibility in their pricing because of too much capacity, and the bargaining power of workers is reduced due to high unemployment. In addition, with power increasingly weakened union, globalization has led to a cheap production of goods with high labor in China and other emerging markets, undermining the wages and employment prospects of workers unskilled workers in advanced economies. With low wage inflation, it is unlikely that there has been a steep rise in property. However, inflation fell even more today because of the overall downward adjustment of commodity prices in response to weak global growth. And gold follows the actual and expected decline in inflation. Third, unlike other assets, gold yields no income. While publicly traded stocks pay dividends, bonds have their coupons, and houses, rents, or are just a game of capital appreciation. Now that the global economy recovers, other assets - listed real estate or even the resurgent shares - now give better yields. Indeed, U.S. and global equities listed are far better than gold since the sharp increase of its course in early 2009. Fourth, the price of gold rose sharply when the real interest rate (adjusted for inflation) became negative after the various rounds of quantitative easing. The time to buy gold is when actual returns on cash and bonds are negative and declining. But the best prospects in the U.S. and global economies imply a term exit quantitative easing and zero interest rates from the Federal Reserve and other central banks, which means that real interest rates will rise rather than drops. Fifth, some have argued that the heavily indebted sovereigns would encourage investors to turn to gold because of the risks borne by the bonds. But there is an opposite situation. A large number of heavily indebted governments have substantial gold reserves which they may decide to get rid of to reduce their debts. In fact, the information that Cyprus planned to sell a small fraction - about 400 million Euros ($ 520 million) - its gold reserves led to a fall in the price of gold by 13% in April. Countries like Italy; which have massive gold reserves (over $ 130 billion), might also be tempted to do so, which would lead to a further decline in the price.