Gold News

Gold ends London unchanged for the week; "money supply matters" says top Euro banker

Spot gold prices closed London little changed for the week at $654.50 per ounce, but fell away as New York was left to see out the session.

The day's gain of more than $5 came as the US Dollar slipped on the forex market, only its second weekly loss in the last two months.

Shares in Blackstone Inc. – the newly listed US private equity giant that recently gained a $3 billion mandate from the Chinese government – jumped more than 16% on their first day of trading.

But Wall Street as a whole pointed lower, as stocks in Europe closed the day 0.3% down after the IFO index of German business sentiment came in below analyst forecasts.

That took the week's final loss to 1.7% for the FTSE Eurofirst 300 index, even as the European single currency rose to hit a new life-time high of ¥166.94. It broke a two-week high to the US Dollar of $1.3460.

The fastest-moving currency on Friday, however, was the Swiss Franc. It leapt 0.8% against the Dollar – and gained 0.6% to the Euro – after the Swiss National Bank took its overnight lending rate to 2.5%, the highest level since Sept. 2001.

Also in Zurich, the head of the European Central Bank – Jean-Claude Trichet – broke ranks with the US Federal Reserve by saying that growth in the supply of money does indeed matter when trying to control inflation.

"Totally ignoring trend movements in money growth would entail, in my view, excessive and unreasonable risks," Trichet told a conference celebrating 100 years of the Swiss central bank.

History shows that "an upswing in trend money growth points to the existence of upward medium to long- term risks to the inflation profile."

Eurozone money supply growth has now hit a near two-decade record. The US Fed stopped publishing its broad money supply at the start of 2006.

If you're at all concerned by the threat of more money cutting the value of each Dollar, Euro or Pound that you hold, be sure to visit and consider a position in physical gold bullion – a prove store of value for more than 3,000 years – as a defense.

Adrian Ash

Adrian Ash, BullionVault Gold News

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.

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