Even when gold was meandering around the price value of $ 650 dollars research showed that generally September is traditionally a huge month with the gold commodities. On average since September 2000 the month of September has been the second best month for gold and gold bullion sales. Sales dollar figures are only slightly behind the best sales month for gold and gold bullion that being November. Even more provactively, virtually all of the seasonal gains during September occurred in the second, last half of the month. So while the Fed was throwing the dollar currency to the wolves , gold itself generally does very exceptional in sales , demand and valuations during the month of September.
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Early on gold unpegs in its traditional price cycles. Speculators often do not believe so the HUI and silver can lag in market values. Once the speculator’s faith returns, catch up rallies in silver will often surpass gold’s momentum.
At mid August 2007 , gold was barely holding on to price levels of $ 650. The HUI closed at 300 after plunging to 285 on the brutal mini-panic morning of August 16th. But as usual when there is no real rational reason to be scared, the situation can and will change. However the changes are generally not with a whiplash inducing speed thrust.
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Sphere: Related ContentSeveral investment areas such as real estate are now experiencing real tribulation.
Not everyone studies current events imaginatively enough to detect the subtle events that change the world forever. It is not easy for many to see day to day changes that are occurring that are scarcely noticed. Sometimes however there are seminal events comparable to the start of a major bull market or bull markets.
As one example , the Treaty of Versailles ( June 28, 1919) after World War 1, unwisely placed such onerously heavy burdens on Germany that they spawned a horrendous hyperinflation in 1920 -23 that was punished by World War II. That same Versailles event also carved up Africa along arbritrary lines on crude maps that included hostile people within the same countries , now resulting in tragic wars nearly one century later. Not everything returns to the status quo ante, just as we can never go home again exactly the same way.
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Sphere: Related ContentWithout a doubt , the primary catalyst for gold’s more than amazing performance was the lagging U.S. dollar and the Feds’ cuts that more than pointed out and emphasized and exaggerated that weakness. It is important to point out of course that the Fed’s cuts were not the only factor or factors. Most currency and precious metal market valuations result from a confluence of factors all coming together.
Gold perveys a seasonal trending. Even when at a time when gold was meandering in value around $ 500 sure enough the fall time of September to November were times of increases in the value of the precious metal “gold”.
Autumn is the biggest buying season for gold for a variety of reasons. Most of the world’s population indeed lives in the northern hermispheres. Fall time is harvest time for the agricultural sector , which is awash in cash. In the Asian countries , who over time have been more than burnt by paper currencies , especially during times of political strife and conflict, gold has a long standing tradition as the investment of best stability in value. Gold has always been the best choice for retaining investment values. Conservation of capital is always always always the first parameter.
India has long been the world’s largest gold consumers. 2/3 of the gross demand for the precious metal gold is for gold for jewellery. Unlike just being a fashion statement , in India gold serves not only as a fashion statement but also another role for its investment and monetary values. When brides marry in India the dowry is often given in lavish amounts of gold jewellery. This is not only meant to adorn the bride - but also to give a financial start to the young family - such as giving a down payment for a home as is done in North America.
Fall time is the most preferred time for weddings in India- mainly during the festive season of November and October. Hence a large portion of the demand for gold and gold bullion ( for jewellery) in one of the largest markets for gold - the country of India , is during the fall.
Ultimately economics if primarily based on supply and demand. Simply put the factors for gold demand greatly increase and come together in the fall time. Hence it is fairly standard to see increases in the price of the metal gold in the fall time period.
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Sphere: Related ContentSilver has not been received as favorably in the markets as gold - although its valuation is on the steep upward trending. This not atypical though. Early on gold’s rises. the speculators do not believe so yet, so the H.U.I. and silver with it can be laggards. Once the speculator’s faith return, catch up rallies may even surpass that of the precious metal gold.
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The HUI is generally a far more accurate reflection of the sentiment among PM investors than gold. Despite the golf price hovering around the $ 700 dollar mark for several weeks prior to the Fed it did not impress PM- stock speculators. The HU flatlined in its 360 degree resistance zone while gold soared higher.
However on the actions of the Federal Reserve in general overall stocks soared. However the PM stocks got a sympathetic bid. The irony here is that as PM sticks investors are seldom , if ever, fans of the Federal Reserve that this episode is just a reflection of the still more than heavily damaged sentiments the late summer August mini panic of sorts created and fostered.
Silver is like the HUI. a great more speculative than gold. With the new rallies in gold silver traders remain on the sidelines
Sphere: Related ContentGold has already been rising in anticipation of the Fed’s throwing of the dollar to the proverbial wolves. The traders of gold did not expect a whole half point either, though as gold marched up higher after the decisions taken by the Fed. If the Fed itself no longer cares about the health of the dollar why on earth should foreign investors - both currency traders and precious metal traders and speculators. Of the trillions of dollars of capital bleeding worldwide thanks to the dollar’s woes, of course some given fraction will migrate into the gold arena.
Gold’s appreciation in value versus currency levels may be dramatic in the near and long term future. If major global investors worldwide are shocked further into diversifying away from far too overweight dollar based holdings - then what are the options ?
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What an extraordinary month ! After being backed into a corner by free market bond yields it cannot control the Fed had no choice but to cut rates. Rather than a polite little cut though , it slashed by half a point. Naturally the market traders were more than excited about this and instantly bid the S & P 500 back into its old topping range from months past. But as always , far more was at stake than stock market sentiment. Ahead of the Fed’s expected easing, the USDX was already on the verge of new all time lows. As the U.S. dollar is a fat paper currency that derives its value solely from international faith in Washington , it was on a precepise of a cliff . Few things will damage confidence more in any price faster than new and newer all time lows. And the dollar like any other financial instrument competes for international savings based on yield and net yield. The lower the yield of the short term American debt markets. the less attractive the U.S. dollar currency becomes. And since the actual rate of savings by the average run of the mill American / American consumer / American saver is low, our whole import based high standard of living is totally dependent on foreign investors subsidizing the current American way of life. So while the markets forced the Fed’s hand , it was still a huge shock to see it slash short term dollar yields with the currency in its most precarious state in history.
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Platinum producers may shortly have shortfalls in their foreign currency exchange cash flow and accounts.
In terms of precious metals - Platinum especially is that alternatives to these expensive precious metals are currently being introduced and rolled out in the market. For example Mazda Motors Corporation ( Japanese) has announced that it has developed a new emissions catalytic convertor that shall cut demand from this important sector of the precious metals and importantly the foreign currency earnings of this sector .
Demand may well be cut for Platinum by 70 - 90 % resulting in substantially lower foreign exchange earnings for Platinum and Palladium precious metal producing countries and areas.
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Similarly with copper metal shrugging off a large decline in foreign currency earning cycles - the price of copper has slipped greatly. This pause after prices and resulting foreign currency earnings had slipped reflect concerns about the strength of Chinese and asian demands following more than robust copper imports in the second quarter of 2007.
A Copper metal and forex earnings study group has forecast a surplus on the market this year - resulting in decreased spot prices - and resulting lower foreign currency earnings for producing countries. Although expected to ease later in the year as supplies grow and expand, comparatively low stocks against a backdrop of healthy global demand should keep prices and foreign exchange earnings intact , steady and robust.
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