A Return to the Gold Standard

  Today’s AM fix was USD 1,472.50, EUR 1,125.51 and GBP 947.80 per ounce. Friday’s AM fix was USD 1,462.25, EUR 1,123.43 and GBP 947.79 per ounce.

More speculative gold buyers appear to have been spooked by the FOMC minutes from the Fed’s January 30th meeting which “said the central bank should be ready to vary the pace of their $85 billion in monthly bond purchases amid a debate over the risks and benefits of further quantitative easing.”  Gold rebounded this morning from a 7 month low as physical buyers in Asia bought the dip and it is likely that central banks are also accumulating after this sharp correction.

Mark O'Byrne submits: Gold stabilized in Asian and early European trading prior to a 1% fall, while silver’s sharp price fall continues and silver is now down 20% in USD terms in five days. The huge and unprecedented increase in margin in the paper silver market has forced some weak hands out of the silver market and allowed the concentrated shorts on Wall Street to press their advantage to the downside.[Click all to enlarge]

Mark O'Byrne submits: Gold is tentatively higher against the euro but mixed against other currencies, while silver is higher again in most currencies. Both probed upward Thursday morning and are exhibiting signs that they may push higher prior to a much anticipated correction. The Greek 10-year yield has just surged over 13.2% and this is leading to falls in the euro and risk aversion with equities, commodities and oil falling.

Mark O'Byrne submits: Gold’s two consecutive days of nominal record highs have seen some profit taking as oil is flat, the dollar is marginally higher and the euro has fallen. The ECB’s 0.25 % interest rate hike may lead to further profit taking today but rising interest rates in an increasingly inflationary environment will be positive for gold as it was from 1965 to 1981 (see charts below).

By Mark O'Byrne: Gold has surged nearly 4% in Japanese yen this morning as the BOJ entered currency markets overnight selling yen thereby depreciating their currency against the dollar and other fiat currencies. Gold’s London AM fix was USD 1,664.25/oz, EUR 1,170.61/oz, GBP 1,018.20/oz. Gold reached new record nominal highs in majors yesterday and remains close to these record highs today. (Click to enlarge)

Mark O'Byrne submits: Gold: Risk appetite increased yesterday as the first day of the new month saw equity buyers return and bond prices fall. Gold and silver prices fell marginally but remained near multi week highs and in gold's case very near the all time record high (nominally). European equity markets are a bit more tentative this morning and the pound and the dollar have come under selling pressure.

Mark O'Byrne submits: Markets have recovered somewhat from the recent sharp sell offs despite the worsening nuclear situation in Japan. Gold and silver have made very tentative gains from the falls seen yesterday as commodity and equity markets (and the Nikkei in particular) have stabilised somewhat after the recent sharp falls. (Click to enlarge)