Gold News

Gold in the Toilet. Literally...

Lenin would be proud. Households and investors are flinging gold into the sewers...
 
QUITE literally, gold is being flushed into the sewers, writes Adrian Ash at BullionVault.
 
That's according to a study by Cardiff University's School of Earth & Social Sciences.
 
The sludge burned out of UK water as it heads through recycling is "consistently high in gold content", according to Dr Hazel Prichard.
 
Back below $1070 per ounce for the first time in nearly 6 years, gold's market price is also in the toilet for City traders and US fund managers too. 
 
Other things, in contrast, have rarely looked better. Which tends to be the way other asset classes move as gold makes a prolonged dive. 
 
UK house prices, for instance, have never been higher according to new government data.
 
The US stock market is killing gold too says this natty little video from Bloomberg – charting the simple Dow/Gold Ratio – and concluding that human ingenuity is beating out the dead lump of metal.
 
Well maybe. Listed US-business owners can now buy 3 times as much gold by selling their stock as they could – at least according to the Dow/Gold Ratio – at the depths of the financial crisis. Otherwise known as the peak of the decade-long gold bull market.
 
Daily chart of the Dow/Gold Ratio, last 10 years. Source: St.Louis Fed
 
Contra Bloomberg however, you could look at the present as the result of the past...rather than as a guide to the future. 
 
UK housing investors, for instance, face a slowing economy...plus declining inflows from those legendary "foreign" buyers...plus a jump in supply towards meeting the perennial claims of a shortage.
 
The US stock market's 2015 gains, meantime, show the worst "breadth" since the DotCom Bust according to Goldman Sachs analysts.
 
Just 5 mega-stocks account for the entire advance in the S&P500 index so far in 2015. The other 495 shares have lost value or flat-lined. 
 
Still, UK estate agents are bullish on houses...of course...and Goldmans are sanguine on stocks. Stay the course in equities, the investment bankers advise. Nothing to worry about. 
 
Well maybe again. Or maybe the fresh plunge in copper, crude oil, silver and other industrially useful stuff says there's trouble ahead for industry...and thus wages, demand, spending and investment...as well as for famously useless gold.
 
The huge overhang in US corporate debt might make equity bulls feel a little uneasy too. Non-financial firms borrowed $1.5 billion in 1 week alone, says the St.Louis Fed.
 
But hey, human ingenuity has been beating gold flat out. So like maybe, for US corporations, humanity can now find a way to service and repay record-high debts even as incomes slide. 
 
Y'know...just like households and banks failed to do during the last financial crisis.
 
For the meantime, Lenin would be proud. Instead of the Bolshevik Russian's plan for public lavatories built of the stuff, late degenerate capitalism is flushing gold down the pan. Or like the New York Times asked in 1999 – the last time gold was this hated and disdained both by price and money-manager sentiment, and just before it began a 12-year bull market – " Who needs gold when you've got central bankers?"

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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