Gold News

Gold Jumps to New All-Time Highs, Silver "Dons Investment Hat", as Capital Seeks Hedge Against "Reckless Governments"

Gold jumped against all major currencies in London trade Tuesday morning, hitting fresh all-time highs in Dollars, Euros and Sterling as European stock markets extended yesterday's late drop on Wall Street.

Leading economy government bonds also rose, pushing 10-year UK gilt yields back below 3.50%.

Crude oil ticked down towards $71 per barrel, but base metal prices were mixed – with copper falling and aluminum rising – after China's No.1 aluminum producer, Chalco, said market-prices have fallen below the cost of production.

Silver Prices also rose, unwinding last week's drop vs. the Dollar and reaching 3-week highs vs. Euros.

"If there is a double dip [recession], it will be a reflection of a long-term economic crisis," said CEO of the GFMS precious-metals consultancy Paul Walker, speaking to Bloomberg from Tokyo today.

"That may be good for gold."

Forecasting a 2010 range of $1050 to $1300 an ounce – with a possible jump to $2000 – Walker believes that "the investment case for gold is going to remain robust for the rest of this year."

"When government monetary and fiscal policy is out of control, that can show up in all sorts of ways," says economic consultant Ed Yardeni, quoted by the San Francisco Chronicle.

"Gold is a hedge against reckless governments."

"With the latest shocks to global markets, currencies and equities, people understand the impact and effects of the financial crisis are very far from over," agrees Jason Toussaint, managing director of the World Gold Council's Exchange Traded Gold business.

"There is sometimes a tactical move into gold, but the greater trend, borne out by the data, is increasing buying of gold for the long-term, rather than as a short term hedge."

As Gold Prices rose to a new all-time high of $1252 an ounce in late-morning London trade on Tuesday, silver also extended this week's gains, rising above $18.35 an ounce and adding 5.2% for Dollar investors from yesterday's start.

"Silver has apparently decided to don its investment hat this week," says one London dealer, "benefitting from pro-gold sentiment."

"That said, silver is still underperforming gold," says the latest Metal Matters report from bullion bank Scotia Mocatta.

"The Gold:Silver Ratio was last at 1:66 and trending higher. This suggests that silver's industrial attributes are offsetting some of its safe-haven ones."

French, German and Italian investors wanting to Buy Gold today saw the price rise to €33,800 per kilo – almost 7% above Friday afternoon's one-week low.

European stock markets meantime lost more than 1% on average.

The Gold Price in British Pounds edged above last month's then-record high of £869.48 an ounce.

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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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