From Adrian Ash<\/p>\n
\nBullionVault<\/a><\/p>\n Fresh Easy Money Looms, Dow\/Gold Ratio Falls<\/strong> <\/strong><\/p>\n \nTHE PRICE OF GOLD<\/strong> held in a tight range as London re-opened after the Summer Bank Holiday on Tuesday, slipping $3 an ounce to $1235 as world stock markets fell again to near the end of August some 6% down on the month.<\/p>\n \nSilver prices reversed an earlier 1.5% drop to trade back at $19.12 an ounce. \n“Despite its safe haven status, gold<\/a> came off in tandem with stocks, re-visiting Friday’s low.”<\/p>\n \nThe US Dollar slipped back against the Euro today, but crude oil dropped back through $74 per barrel and government bonds rose everywhere, nudging 10-year US Treasury yields back down to 2.50%.<\/p>\n \n“Gold is caught in a bind,” reckons Tokyo trader Kazuhiko Saito at Fujitomi, speaking to Reuters.<\/p>\n \n“Slowing growth and deflation worries are generally negative for commodities, putting a cap on gold prices<\/a>. [But] at the same time, easy monetary policy continues to keep expectations alive that investment funds will return to gold, putting a firm floor under the market.”<\/p>\n \nA raft of better-than-expected data from Japan and Germany was outweighed according to several London analysts by Monday’s poor Personal Income stats in the US, where income-growth continues to lag price inflation.<\/p>\n \nThe Bank of Japan said yesterday it’s injecting \u00a510 trillion ($117bn) into commercial banking loans, with a further \u00a5920bn ($10bn) of economic stimulus promised by the Tokyo government.<\/p>\n \nBut the Nikkei stock index still sank 3.6% on Tuesday, however, falling to a new 16-month low \u2013 even as the Japanese Yen eased back on the forex market \u2013 after New York’s Dow Jones Industrial Average closed Monday down 1.4% to finish just a few points above the 10,000 mark, unchanged from April 1999.<\/p>\n \nThe Dow\/Gold Ratio<\/a> ended Monday down at 8.1, meaning it would take a little over 8 ounces of gold at current prices to purchase one unit of the DJIA.<\/p>\n \nThe ratio peaked just shy of 43 ounces in Sept. 1999. Averaging 12 ounces since 1928 \u2013 and falling to record lows of two ounces and then one ounce in 1932 and 1980 respectively \u2013 the ratio fell to a 19-year low of 7.4 ounces in Feb. 2009.<\/p>\n \n“It is a data-heavy week,” says Walter de Wet at Standard Bank today, noting the release of manufacturing indices for all major economies, plus US jobless data on Friday.<\/p>\n \n“This could keep the market nervous…and US equities remain under pressure. The strength in US Treasury bonds is supported by expectations of possible bond purchases by the US Fed, and [we] view these expectations of further monetary easing as positive for gold<\/a>.”<\/p>\n \nMeantime, says Standard Bank’s commodity team, “We continue to see gold buying in the physical market, although it has slowed. With gold closer to $1240 an ounce, there also appear to be some gold scrap-selling coming through.”<\/p>\n \nTuesday morning’s sharp drop in Sterling pushed the gold price in British Pounds<\/a> back above \u00a3800 an ounce \u2013 more than 8.4% above late July’s three-month lows.<\/p>\n \nEuro investors wanting to buy gold<\/a> today saw the price tick back towards \u20ac31,300 per kilo, meantime, just shy of last Thursday’s eight-week highs.<\/p>\n \nIn Germany this weekend, a row erupted over Dr Thilo Sarrazin, an executive member of Germany’s central-bank, whose new book \u2013 which accuses Muslim immigrants of being a drain on the economy \u2013 has shot to the top of the best-seller charts.<\/p>\n \nA former member of the Berlin Senate, Dr Sarrazin “has repeatedly and persistently made provocative statements, especially on issues relating to immigration,” the Bundesbank said in a press release on Monday, “categorically distancing” itself from his comments on Islam and “the Jewish gene”, and threatening to take “prompt action”.<\/p>\n \nAdrian Ash<\/p>\n \nBullionVault<\/a><\/p>\n \nGold price chart, no delay<\/a> |\u00a0\u00a0 Buy gold online at live prices<\/a><\/p>\n \nFormerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash<\/strong> is the editor of Gold News<\/a> and head of research at BullionVault<\/a> \u2013 winner of the Queen’s Award for Enterprise Innovation, 2009 \u2013 where you can buy gold today<\/a> vaulted in Zurich on $3 spreads and 0.8% dealing fees.<\/p>\n
\n“A disappointing day for precious metals,” says one Hong Kong dealer in a note.<\/p>\n