From Adrian Ash<\/p>\n
\nBullionVault<\/a><\/p>\n \nReveal US Inflation Rise, Economists Urge Q<\/strong><\/p>\n \n <\/strong><\/p>\n THE PRICE OF GOLD <\/strong>rose sharply at the start of New York trade on Friday, jumping 1.2% from an earlier low in London to hit $1352 per ounce \u2013 some 1.8% higher from last week’s finish \u2013 as new data showed weaker-than-expected US economic growth, with much stronger-than-forecast price inflation.<\/p>\n \nWorld stock markets had already sagged before the Commerce Dept. said GDP expanded by 2.0% annually between July and Sept.<\/p>\n \nThird-quarter domestic inflation, in contrast, beat analyst forecasts by rising to 2.3% per year.<\/p>\n \nThe gold price in Euros also rose on the news, hitting its own 8-session high above \u20ac31,200 per kilo.<\/p>\n \nSilver bullion touched $24.25 per ounce, adding nearly 3.7% from last weekend.<\/p>\n \n“Naysayers point to gold’s price and see a bubble, without understanding that the only acceleration that is taking place is in the rate of decline of paper currency,” writes John Hathaway of Tocqueville Asset Management at Bloomberg today.<\/p>\n \nBearish analysts \u2013 though wrong \u2013 actually help investors, says Hathaway. Because they help keep prices from shooting too high, too fast, giving new buyers the opportunity to buy gold more cheaply.<\/p>\n \n“Anti-gold pundits provide a great service to those who grasp this historical moment…[where] we are past the point of no return.<\/p>\n \n“Quantitative easing may well become a way of life.”<\/p>\n \nUrging $2 trillion of QEII, Jan Hatzuis at Goldman Sachs says that “The Dollar needs to fall a lot further from here if indeed the Fed sees the Dollar as one of its key policy levers for preventing [deflation].”<\/p>\n \nCitigroup’s chief economist in London, Willem Buiter, meantime calls Japan’s recent QE announcement “far too small to achieve anything”, urging money-creation 20 times larger \u2013 some $1.2 trillion \u2013 and advocating time-limited gifts from the central bank of \u00a5100,000 for every adult.<\/p>\n \n“If Japanese consumers refuse to spend the check and save it instead, either attach an expiry date to the cheque…or send another check, this time for \u00a51,000,000. Repeat this, adding zeros, until the consumer gives in and starts spending.”<\/p>\n \nJapan’s Nikkei 225 stock index lost 1.8% on Friday, closing at a 7-week low.<\/p>\n \nTokyo gold futures meantime added 0.7%, rising to \u00a53514 per gram \u2013 well over three times its price from when the Bank of Japan began quantitative easing in March 2001.<\/p>\n \nThe Nikkei stock index closed Friday 30% down from that date.<\/p>\n \n“There is a strong case for an allocation to gold as an asset class on its own merits,” says the latest quarterly report from market-development group, the World Gold Council.<\/p>\n \n“Gold is part commodity, part luxury consumption good and part financial asset, [so] its price does not always behave like other asset classes…making it very useful in periods of financial distress.”<\/p>\n \nAnalyzing how gold tends to rise when US stock markets fall sharply, “Investors who hold gold only in the form of a commodity index are likely to be under-allocated,” says the WGC’s report, “because gold’s weight in typical benchmark commodity indices tends to be small.”<\/p>\n \nEuropean shares also fell on Friday, and New York stock futures pointed lower, after new data showed a stronger-than-expected pace of consumer-price inflation across the Eurozone, but no change in the 16-nation currency union’s 10.1% unemployment rate.<\/p>\n \nGerman retail sales fell 2.3% last month from August.<\/p>\n \nNet lending to UK consumers meanwhile grew by just \u00a3400 million \u2013 the smallest Sept. total since Bank of England records began in 1987.<\/p>\n \nNow suffering negative real returns to cash \u2013 after inflation \u2013 for 28 months running, UK savers wanting to buy gold today saw the price head into the weekend some 0.4% lower from last Friday at \u00a3843 per ounce.<\/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