Gold News

May 2006 revisited

For the first time since 2001, gold is now trading below its price of a year ago...

"THE FACT that we didn't get through $691 suggests we may now start to test the lower end of [gold's trading] range," reckons Jonathan Barratt of Commodity Broking Services.

   "It's still relatively supportive, but I think a few investors are getting a bit annoyed that the market has not gone on through that $691 area again."

  
Many investors, however, will be more than a bit annoyed at gold's failure to recover its 26-year peak of May 2006.

  
For the first time since this bull market began in 2001, gold is now trading below its price of a year ago. Longer-term investors shouldn't be surprised if disappointed traders and fund managers chose to sell out this week.

This Monday's failure to break resistance above $691 – followed by a near 2% sell-off on Tues and Weds – coincided with the 12-month anniversary of last May's huge spike above $725 per ounce.

  
The spike seen in mid-May last year, however, was followed by a 14% drop to $625. It then sank – twice – to just above $570 per ounce.

  
So at current prices, gold will stand significantly higher year-on-year by the start of June. Momentum traders may choose to buy on the bounce in year-on-year gains.

  
Longer-term gold bulls – and all investors concerned about the growing mountain of credit and derivative default risk today – may choose to stick with bullion in summer 2007. For as long as global rates of real interest remain low to negative, money will continue to lose value, even if the paper asset markets record fresh nominal highs.

  
To buy gold today – and enjoy outright physical ownership, free from both credit risk and the hassles of taking delivery and arranging insurance – simply click through to visit www.BullionVault.com now...

Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

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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