Will Germany Put Their Trust In Gold?

Yesterday was a good day for gold investment as the dollar remained around a one and a half week low, and the gold price increased 2% to $1,672. As we said yesterday, the yellow metal is likely to trade in a narrow range this week, and yesterday met resistance at $1,680. Yet this morning it is already at $1,680 at the time of writing, and climbing.

At the moment we are most likely in a bit of a lull period in regard to gold investment, having just seen off the fiscal cliff debacle and about to head into further wrangling over taxes and spending. For the time being we are seeing some increased risk appetite and speculative money return to the precious metals. As discussions over taxes, etc. turn bitter, which they no doubt will, we should see an increase in gold investing and of course, silver.

Bernanke continues to inspire gold investment
Last night Chairman Ben Bernanke spoke at University of Michigan’s Ford School of Public Policy. Prior to the talk markets steadied in anticipation. Bernanke hinted, in contrast to the FOMC’s minutes, that the central bank was not rushing to withdraw monetary stimulus.

Earlier in the day US Treasury Secretary Geithner caused US and European stock-index futures to drop after warning that a failure to raise the debt ceiling would be bad news for everyone. Meanwhile President Obama warned Congress that the debt ceiling was not to be used as leverage in the budget debate.

Gold bullion investment is seemingly gaining popularity in Japan as further pressure is lumped on the central bank to add more monetary-easing measures. The benchmark gold contract on TOCOM hit a record high of a record high of 4,821 yen a gram yesterday.

Platinum’s 3-month price high on the back of supply concerns may of course have been the reason why the Americans gave up on the $1 trillion dollar coin, one now just needs to wonder when we’ll get the paper version instead. Price climbs for the precious metal are likely down to the world’s largest producer of platinum, Anglo American Platinum Ltd., releasing its financial results and review of operations. The company was besieged by strikes last year.

Germany paves the way for gold repatriation
In breaking news last night German paper Handelsblatt reported that the Bundesbank is about to start moving all 3,396 tonnes of the country’s official gold reserves. This includes the 45% held with the New York Fed and the 11% at the Banque de France. Interesting considering back in November the Bundesbank told us this "discussion [over gold repatriation] would come to an end."

Whilst the details of the new gold storage scheme are not due to be revealed until tomorrow, the paper reports that less is expected to be held in the US whilst zero will be held with France. We await tomorrow’s announcement with interest followed promptly by explanations as to why only a certain amount can be brought back from New York.

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