Spot Gold Prices sank yet again Friday morning, sinking to a fresh 13-month low for US buyers at $683 per ounce.
Global stock markets and commodity prices also crumbled once more in the face of huge gains in the Dollar and Yen – the two currencies most owed by leveraged investors worldwide.
Tokyo's Nikkei stock index – strongly correlated with the Dollar/Yen exchange rate ever since this global money crisis began in summer '07 – sank another 9.6% for the session, losing a record one-third of its value so far this month.
US crude oil futures sank $5 per barrel to just $63, while German equities crashed more than 8% to their worst level since Nov. 2004.
On the forex market, the UK Pound slumped almost 10¢ to the Dollar – a massive 6% – on news that Britain's GDP shrank in the third quarter, the first negative growth since 1992. That took Sterling down to a fresh five-year low beneath $1.63.
The Gold Price in British Pounds held above £440 an ounce.
For French, German and Italian gold buyers, the price dipped briefly below €545 as the single currency dropped 3.5¢ to $1.25.
The Yen meantime leapt to a 13-year high vs. the Dollar as Japanese investors and savers fought to repatriate the $6 trillion-worth of overseas assets they've bought to escape Tokyo's own 0% interest rates over the last decade.
"Gold is following the Dollar and oil," reckons Wolfgang Wrzesniok-Rossbach of the German refining group Heraeus.
Although strong, "the physical demand we are seeing is not enough to stem the tide here."
The sell-off in world gold markets continues to be led by Gold Futures liquidation, however, with the market in future-promised delivery of gold dipping almost into “backwardation” earlier this week as near-dated futures prices only just holding above the Spot Price for immediate settlement.
Demand for physical investment metal worldwide continues to outstrip jewelry buying, meantime, with Gold Coin dealers still reporting shortages and unmet customer orders.
Here at BullionVault – the low-cost, high-security online gold ownership service – the stock of gold owned by customers choosing Zurich storage yesterday rose above 8.2 tonnes, more than twice its level of four months ago and more than three times as much gold as users now store in London.
In the so-called “paper gold” market, Gold Bullion held at HSBC's bank vaults in London on behalf of New York's SPDR exchange-traded trust – a financial vehicle in which investors can own stock certificates “backed” by one-tenth of an ounce, minus an annual 0.4% reduction – shrank barely 1% by Thursday, even as the international Spot Price fell by one-eighth in Dollar terms from Monday's start.
"[Owning physical] gold is unique in that it is an asset that bears no credit risk and therefore involves no counterparty,” notes Natalie Dempster, chief investment analyst at the World Gold Council marketing group.
“So gold is no one else's liability [and] this is an extremely attractive characteristic to investors given the current financial environment.
“The fact that gold did not head higher during the current phase of the crisis reflects gold's status as an asset of last resort which investors will use to raise cash in desperate times."