The Daily Nugget: Gold Price Waits For Storm To Pass

This morning the gold price hit a low of $1,704 before recovering. This month has seen the biggest monthly loss for the yellow metal in five months. The debasement of money is continuing, it’s just that countries are taking it in turns to make it ‘official’, fortunately the gold price remains low in the short-term which investors should turn to their advantage and buy gold bullion.

As we mentioned in yesterday’s Daily Nugget the Bank of Japan were due to meet in the early hours of this morning, as a result Asian stocks were a mixed bag yesterday as they awaited the outcome of their decision. Household spending and industrial spending figures were released before the meeting and both strongly disappointed.

The BOJ have decided to hold interest rates to near-zero levels, at 0.10%. They have also decided to increase their asset-purchase programme for the second time this month, by $138billion (11 trillion yen).

The gold price held steady around $1,710 yesterday as concerns for global growth remained. Gains were, however, capped thanks to the US dollar index trading slightly higher. By the end of the day gold had dropped for the second day in a row. Silver futures for December delivery also fell.

Thanks to Hurricane Sandy, the markets were quiet yesterday as most of the New York markets were closed. Whilst most are waiting for Friday’s payroll report, there is now a possibility that this may not even be released; some data set for release yesterday was not released thanks to the storm. Activity in gold futures was light yesterday thanks to the closure of most markets.

Physical purchases from China also seem to be gaining momentum; this is expected to increase between now and the run up to Chinese New Year.

Once again markets learnt not to take forecasts too seriously as Germany’s unemployment figures came in double that of predictions. This is following the Bundesbank’s statement last week which foresees the economy contracting the final quarter this year.

We have written before about the Turkish love to buy gold bullion, we have also reported how the government are trying to gently persuade individuals to get it into the banking system. Bloomberg have now reported on the Turkish government’s very clever gold confiscation scheme, but of course they don’t see it quite like that. "The effort to lure gold into banks also will increase household savings"…what?!

Household savings are doing just fine; they just don’t need to be in the banking system, i.e. within reach of the government’s sloppy economic management. You can read their report here but our article on it may be more interesting!

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