From Adrian Ash<\/p>\n
\nBullionVault<\/a><\/p>\n \nSilver Spike Fades After “Manipulation” Statement<\/strong><\/p>\n \n <\/strong><\/p>\n \nTHE PRICE OF GOLD<\/strong> slipped back to last week’s finish below $1330 an ounce in London on Wednesday, as the US Dollar rallied after a Wall Street Journal<\/em> report said the Federal Reserve will be more cautious-than-expected in next week’s hotly-anticipated asset purchase program \u2013 also known as QEII.<\/p>\n \nCrude oil contracts fell for the first time since Friday. Emerging-Asia stock markets lost 0.8%.<\/p>\n \n“Despite [last week’s] setback” in gold prices, says Wolfgang Wrzesniok-Rossbach in his Precious Metals Weekly<\/em> for German refiner Heraeus, “a real change in trend is presently not foreseeable.<\/p>\n \n“A large dip would be just a fresh opportunity to enter the market again, as the generally positive environment [for gold investors] should hold for the time being. It will change one day, when global interest-rate policies change.”<\/p>\n \nBuying only Treasury bonds, rather than commercial debt, the Fed will target 2- to 10-year maturities according to the WSJ<\/em> \u2013 which cites “interviews with some officials” \u2013 dripping new money into the bond market rather than unveiling its total package all at once.<\/p>\n \n“Imported inflation caused by out-of-control Dollar printing and skyrocketing commodity prices is hitting China hard,” the People’s Daily<\/em> today quotes Chinese commerce minister Chen Deming, speaking at a trade fair in southern China.<\/p>\n \nThe People’s Bank of China today cut the Yuan’s official exchange rate to a 1-month low, down 0.3% from Tuesday.<\/p>\n \nLast weekend’s G20 meeting only “bought some time” before the US Congress will join the Senate in calling China a “currency manipulator”, says a senior China analyst quoted by Reuters today.<\/p>\n \n“Doubtlessly, if the Yuan is set to become an international currency like the Dollar or the Euro, China has to get a huge gold reserve to support it,” says Meng Qingfa, a researcher at the China Chamber of International Commerce, quoted by the International Business Daily \u2013 the official newspaper of Beijing’s Ministry of Commerce.<\/p>\n \n“A reserve of 1,054 tonnes [of gold] is far from being enough.”<\/p>\n \nBuying gold around $1300 an ounce, says Meng, the fast-growing Asian economy could match Washington’s 8,000-tonne gold reserves by using 10% of its $2.65 trillion in foreign currency holdings.<\/p>\n \nElsewhere on Wednesday, South Korea reported a sharp slowdown in its economic growth, while broad money-supplies across the 16-nation Eurozone slipped to 1.0% in Sept.<\/p>\n \nUS mortgage applications showed a rally for last week, bouncing from early Oct.’s sharp decline.<\/p>\n \nThe Euro fell to a 1-week low beneath $1.38, holding the gold price for French, German and Italian investors above \u20ac30,900 per kilo.<\/p>\n \nBritish investors wanting to buy gold today saw the wholesale-market price slip back below \u00a3840 an ounce \u2013 a record-high when crossed in May this year, now some 3.5% off the record price hit in late June.<\/p>\n \nIn Dollar gold prices, “Only a weekly close above the $1400 level would change our currently medium-term toppish outlook,” says Axel Rudolph in his latest Technical Outlook<\/em> for Commerzbank, “this week at least.”<\/p>\n \nLooking at the ratio of gold to silver prices \u2013 a measure of relative strength in the two precious metals’ prices \u2013 the current reading of 55.92 “is only marginally above major support” says Rudolph, citing “the March-to-July 2008 consolidation zone and the 2006-2010 uptrend line [now] at 52.24.<\/p>\n \n“This we expect to stop the current tumble in the ratio, at least temporarily” \u2013 meaning a pause in silver’s outperformance of gold prices.<\/p>\n \nSilver rose late Tuesday to a 1-week high at $24.25 per ounce \u2013 matching and extending gold’s overnight action \u2013 following a statement from US regulator Bart Chilton that he wants the Commodity Futures Trading Commission to prosecute “repeated…fraudulent” but so far un-named “efforts to persuade and deviously control” silver prices.<\/p>\n \n“Silver option-related buying hit [electronic trading platform] Globex as soon as it opened this morning,” says one Hong Kong dealer in a note.<\/p>\n \nBut the silver price quickly fell back in Asian trade this morning, dropping 3.1% by the time London opened for business as selling “snowballed” despite a Wall Street Journal report that said CFTC lawyers have interviewed employees of J.P.Morgan \u2013 commonly cited by anti-manipulation lobbyists as holding a “disproportionately” large short position in silver futures after it acquired the stricken Bear Stearns investment bank in March 2008.<\/p>\n \n“Based on the breadcrumbs that Bart Chilton has given us,” the Financial Times<\/em> quotes UBS strategist Edel Tully \u2013 the only major-bank analyst to comment so far \u2013 “it’s hard to see what impact [his statement] could have on the market.<\/p>\n \n“[Not] unless the CFTC says the manipulation is ongoing, which we don’t see evidence of.”<\/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