Gold Price info - week ending August 24

Another bumpy week in the credit world.

In New Zealand we appear to have lost another finance firm this week (the sixth in 15 months). This is emulating the some of the issues faced in the USA currently, with the Federal Reserve talking about dropping interest rates in an effort to try and support the US economy. With the sales of gold in the previous weeks to cover cash flow shortages, we’ve seen consistent price bounce backs giving an indication of the demand for gold as a support. We’ve seen the demand for gold rise in the Middle East China and India (the demand in the Middle East has jumped by 30% in Q2 2007) which is why the price of gold is still quite static, despite the ECB sell offs, and the short position covering in the US and European markets.

Another indicator is the mining industry, as mentioned previously. In all, 161 tonnes of gold has been removed from the hedge books in the second quarter of this year, with the large companies (e.g. Newmont) preferring to trade more on the spot price rather than preset prices up to 6 months in the future.

Oil prices are still lower than the last few months which also helps to keep the gold price subdued.

The carry trades are back in the mix – it appears that with the resumption of normal trading the carry trades are back in the market, with the NZ dollar again cracking 71c.

The effect this has is to reduce the price of gold in the local market, which if you are looking to buy, is always a good thing. Bank of America buying $2 Billion of Countrywide stock has helped to bring a spark of life back in to the US market, so it looks like things may be “back to normal” in the short term. Watch this space...

Get your magnifying glasses out... a nano conveyer belt.

And don’t forget to smile while you’re out.

Gold info - update 21/8

What a week. It’s taken several days to recover, and we’re gearing up for more ructions shortly.

Gold movement last week was very much in response to the US Markets. We had relative stability until Thursday, when the Gold price dropped $20 to below $650, again tied into liquidity issues in the markets. Friday saw a return to $662 much like the previous week. The basis of this movement was the US Fed dropping the discounted interest rate (Govt to bank) by 1/2% which also affected the NZD which recovered, keeping the gold price lower in the local market. A volatile week, but support for bullion is again firming up given the uncertainty in the global markets. The US gold price has been stable since, with the US markets seeming to be in a lot better shape after the discount rate drop.

NZDUSD cross, this has been quite volatile, with last week seeing a huge drop to 0.665 at one stage. After the discount rate was dropped, and the markets calming, we’ve had a steady increase back in the exchange rate with this morning seeing us back into the 0.69 -0.70 range.

Going forward is expected to still be quite choppy, the general feeling is that the credit crisis in the US is still quite bad, with a lot worse to come, but once again, it’s a matter of when, and can it be corrected.

In New Zealand we’ve had the closure of another finance company (Nathan’s) which again reinforces the point, diversification is the safest route.

Another Golden palace – this time in Hong Kong (Chinese website)