From Adrian Ash<\/p>\n
BullionVault<\/a><\/p>\n \nSilver Hits Highest Price Since Bear Stearns’ Collapse<\/strong><\/p>\n <\/strong><\/p>\n \nTHE PRICE OF GOLD<\/strong> rose as the Euro fell from near 5-week highs to the Dollar and world stock markets also slipped early Tuesday.<\/p>\n \nRising to a four-session high of $1257 an ounce for US investors, the gold price in Euros jumped 1.5% from yesterday’s low to touch \u20ac31,480 per kilo.<\/p>\n \nG7 government bonds rose, depressing the yield offered to new buyers, while commodity prices ticked back.<\/p>\n \n“Traders were pre-occupied with [platinum-group metals] in the morning,” said one Hong Kong dealer of Tuesday’s Asian trade.<\/p>\n \n“Gold and silver were left on the sidelines” until London opened, when platinum and palladium \u2013 used primarily in auto-catalysts, and so dependent on new vehicle demand \u2013 rose 1.4% to reach new six-week highs.<\/p>\n \nSilver prices also rose once again, recording a London Fix of $20.31 an ounce, the highest level since 18 March 2008 \u2013 when Bear Stearns was rescued by a US Treasury-backed takeover by J.P.Morgan.<\/p>\n \n“If the gold price does continue to move upwards as many are still predicting, then silver could be dragged up to even higher levels,” writes Lawrence Williams at MineWeb today.<\/p>\n \n“Many analysts make the point that the historic Gold\/Silver Ratio has been nearer 15 than the current 62.5 (gold at $1250, silver at $20),” he adds.<\/p>\n \n“But then the role of silver has changed dramatically since those days, from being a true monetary metal to one which is driven more by industrial demand with precious metals overtones.”<\/p>\n \n“All four precious metals are really keeping a very close eye on the US Dollar right now, and if the Dollar doesn’t shape up, as such, this safe-haven buying will continue,” reckons Afshin Nabavi, head trader at Swiss refinery MKS’s finance division.<\/p>\n \nGold prices, however, continued to show a positive \u2013 not negative \u2013 correlation with the Dollar on Tuesday, extending the longest period of moving in sync with the US currency since Dec. 1995.<\/p>\n \nSo far in 2010, gold and the Dollar have moved together vs. the Euro on 103 out of 176 trading days. Previously showing a strong, negative correlation with the Dollar of minus 0.50 on a daily basis (rolling one-month), gold and the Dollar have now displayed a positive correlation of +0.1 on average since New Year’s Day, peaking above +0.91 as the Greek debt crisis struck in May.<\/p>\n \nNew data today showed Industrial Production across the 16-nation Eurozone contracting unexpectedly in August, while Economic Sentiment on Germany’s ZEW measure also fell.<\/p>\n \nUK house prices rose much less quickly than analysts forecast on the government’s official measure. Consumer Price inflation also defied predictions by holding at 3.1% per year.<\/p>\n \nCPI inflation has now matched or exceeded the Bank of England’s upper tolerance of 3.0% per year in 19 of the last 36 months. The Bank has nevertheless slashed interest rates to 300-year lows at 0.50%.<\/p>\n \nGovernor Mervyn King is only obliged to write an open letter to the government, defending the Bank’s policy, when inflation rises above 3.0%, rather than remaining above that level.<\/p>\n \nKing has now written eight such letters \u2013 all of them since April 2007.<\/p>\n \nOver in the gold futures market, rapid growth in speculative demand “drastically slowed” last week, notes the latest Precious Metals Weekly<\/em> for ABN Amro from the VM Group consultancy.<\/p>\n \n“ETF investment [also] fired a possible warning shot over the sustainability of the gold price rally, by falling for the first time on a weekly basis since July and, notably, across all regions.”<\/p>\n \nNew York’s SPDR gold ETF<\/a> trust reduced its gold bullion holdings by another tonne on Monday, taking them back to a 1-month low at 1292 tonnes.<\/p>\n \nLondon-listed GBS also cut its holdings slightly, down to the 18-month average of 126 tonnes. \nTwo years after the collapse of US investment bank Lehman Bros., the New York Federal Reserve said yesterday it will recycle some $27 billion of its maturing mortgage-bond portfolio into Treasury bonds over the next four weeks.<\/p>\n \nTargeting both fixed-income and inflation-protected bonds (TIPS), the NY Fed has already bought some $18bn of US Treasury debt since mid-August.<\/p>\n \nBy this morning’s London Gold Fix, gold priced in Dollars stood 61% higher from 15 Sept. 2008 \u2013 the day Lehmans filed for bankruptcy.<\/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 and now backed by the mining-sector’s World Gold Council<\/a> research body \u2013 where you can buy gold today<\/a> vaulted in Zurich on $3 spreads and 0.8% dealing fees.<\/p>\n
\nOn the third anniversary of the banking run on Northern Rock \u2013 the UK’s first High Street banking run in over a century \u2013 British investors looking to buy gold<\/a> today saw the price reach a four-session high above \u00a3816 an ounce, some 129% higher from 14 Sept. 2007.<\/p>\n