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Market Oracle FREE Newsletter
Gold the Only Asset Not Being Debased by Central Bank Money Printing
THE SPOT PRICE
of dropped Friday morning in London, heading into the weekend at $921 an ounce – some 3% beneath Monday's start – as the US Dollar rose on the currency markets and world stock markets ticked lower.
US crude oil prices slipped back towards $54 per barrel, but remained 5% up on the week.
Government bond prices were meantime bid higher worldwide, knocking 10-year German Bund yields back to 3.07% after new data today showed inflation in the world's fourth-largest economy falling to a 10-year low.
German import prices fell sharply, down 5.4% in Jan. from a year earlier.
Next week's summit of G20 leaders here in London – faced with the worst global economic contraction since at least 1980 – is expected to bring to a head the issue of &competitive devaluation& between major currencies such as the Euro, US Dollar, Japanese Yen and British Pound.
&There is a nice rising trend line [in ] drawn off the November, January and March lows, which comes in at $914,& says technical analysis from Scotia Moccatta, the precious metals dealer.
&This trend line broke briefly on Wednesday last week to $884 before staging a strong rally to $966. We suspect the market is comfortable being bullish on gold while the support at $883 holds.&
Looking at the fundamental picture, &The only currency not getting debased, essentially, is gold,& said Patrick Pittaway of the URAM natural-resources fund boutique at a
mid-week in Zurich.
Pointing to the volume of new money being pumped into the world economy by national governments and central banks, &I certainly think gold will get above the $1030 high that it hit last year,& he added.
&Gold production fell last year and may fall further in 2009,& said Evy Hambro of BlackRock, whose Gold & General Fund has doubled investors' money since 2004, but dropped almost 28% since this time last year.
Falling gold-mine production &is partly due to the lack of exploration success by the
industry,& Hambro explained, &which discovered 15 million ounces last year, compared with production of 80 million ounces.&
Overall, however, barely one-in-three attendees of Citywire's Fund Selectors Forum said gold may break and hold above $1,000 an ounce during the next 3 years. And producer &de-hedging& – where gold miners buy back gold they've sold forward on the futures market to lock in prices and raise cash – fell to a two-year low at the end of 2008, weakening a source of demand that peaked during the strongest gains of the last three years.
&Are we at the end of de-hedging and about to enter into a new era?& asks Raymond Key, global head of metals trading at Deutsche Bank, in the latest edition of
&The lesson in base metals markets is that super-normal profit margins have been destroyed in a matter of months and a large number of producers will not survive if industrial metals remain at current prices.&
Profit margins between the cost of production and market price currently stand at 50% on average in the
sector, says Deutsche's analysis. Margins on copper, in contrast, have been slashed to 14% by the recession-led plunge in prices, while aluminum mines are 18% under-water.
Nickel prices have fallen to barely half the average cost of production.
&Is this not an opportunistic time for gold miners to lock in margins on a two to three-year basis?& says Key, echoing comments made 12 months ago by gold consultancy GFMS when the
reached an all-time peak of $1,032 an ounce.
&One certainly hopes that any gold hedging that occurs will be implemented when the profit margins are as healthy as they are now and not [as happened in the 1990s] when it is a matter of survival.&
Meantime in India today – where Mumbai's Sensex stock index leapt again to end the week 12% higher – record-high
are forcing local jewelers to switch to making imitation jewelry, reports the .
&Normally, a single jeweler gets business for two to three kilogram gold per day,& the newspaper quotes Balvantrai Badani, head of the Rajkot Gold Dealers Association. But with Indian
jumping 27% in the last year – and rising five times over in the last six years – demand &has reduced to just 200-500 grams& per day.
&In order to survive the hard times, many jewellers have shifted from gold to imitation jewelry temporarily,& says Badani.
One gold worker in the north-western city of Rajkot puts the &temporary switch& at 30-40% of local production.
The world's hungriest market for physical gold, India will next month celebrate Akshaya Thrithiya, a key gold-buying festival on the Hindu calendar.
By Adrian Ash
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of
and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2009
Please Note: This article is 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.
Adrian Ash
- The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online
publication.
Only logged in users are allowed to post comments.Base | Definition of Base by Merriam-Webster
: the bottom or lowest part of something : the part on which something rests or is supported
: something (such as a group of people or things) that provides support for a place, business, etc.
: a main ingredient to which other things are added to make something
Source: Merriam-Webster's Learner's Dictionary
Full Definition of base
bases \'bā-s?z\
the lower part of a wall, pier, or column considered as a separate architectural feature
the lower part of a complete architectural design b
the bottom of something considered as its support :
a side or face of a geometrical figure from which an altitud especially
one on which the figure stands
the length of a base d
that part of a bodily organ by which it is attached to another more central structure of the organism2 a
a main ingredient &paint having a latex base& b
a supporting or carrying ingredient (as of a medicine)3 a
the fundamental part of something :
the economic factors on which in Marxist theory all legal, social, and political relations are formed4
the lower part of a heraldic field5 a
the starting point or line for an action or undertaking b
in surveying c
a center or area of operations: as
the place from which a military force draws supplies
a place where military operations begin
a permanent military installation
a number (as 5 in 56.44 or 57) that
especially
the number that when raised to a power equal to the logarithm of a number yields the number itself &the logarithm of 100 to the base 10 is 2 since 102 = 100&
a number equal to the number of units in a given digit's place that for a given system of writing numbers is required to give the numeral 1 in the next higher place &the decimal system uses a base of 10&; also
such a system of writing numbers using an indicated base &convert from base 10 to base 2&
a number that is multiplied by a rate or of which a percentage or fraction is calculated &to find the interest on $90 at 10 percent multiply the base 90 by .10& e
the starting place or goal in various games b
any one of the four stations at the corners of a
a point to be considered &his opening remarks touched every base&7 a
any of various typically water-soluble and bitter tasting compounds that in solution have a pH greater than 7, are capable of reacting with an acid to form a salt, and are molecules or ions able to take up a proton from an acid or able to give up an unshared pair of electrons to an acid b
any of the five purine or pyrimidine
of DNA and RNA that include cytosine, guanine, adenine, thymine, and uracil8
a price level at which a security previously declining in price resists further decline9
the part of a transformational grammar that consists of rules and a lexicon and generates the deep structures of a languagebased \'bāst\
adjective baseless \'bā-sl?s\
adjective off base1
&estimates were way off base&2
&caught off base by the charges&
defined for English-language learners
defined for kids
Examples of base in a sentence
&the firm belief that complete trust between husband and wife is the base of any successful marriage&&the army's base of attack was kept top secret until the battle began&
Illustration of base
Origin and Etymology of base
Middle English, from Anglo-French, from Latin basis, from Greek, step, base, from bainein to go
— more at
First Known Use: 13th century
Related to base
Synonyms , , , , , , , , , , , , Antonyms , , Related Words , , , , , , , , , , , , , ; , ,
(also ), , , , , , , ; , , , , , , , , , , , ; , , , Near Antonyms , , , , , , , , , , , ,
: to have a particular place as the main place where a person works or lives or where a business operates
Source: Merriam-Webster's Learner's Dictionary
Full Definition of base
basedbasing
to make, form, or serve as a base for2
to find a base or basis for —usually used with on or upon
defined for English-language learners
Examples of base in a sentence
They are going to base their new company in Seattle.The company has based itself in London.Our tour group based itself in a hotel in the heart of the city.
First Known Use of base
Related to base
Synonyms , , , Related Words , ; , , , , ,
: not honest or good
of a metal : having low quality and value
Source: Merriam-Webster's Learner's Dictionary
Full Definition of base
of little height2
low in place or position3
resembling a villein :
&a base tenant& b
held by villenage &base tenure&6 a
being of comparatively low value and having relatively inferior properties (as lack of resistance to corrosion) &a base metal such as iron&
— compare
containing a larger than usual proportion of base metals &base silver denarii&7 a
lacking or indicating the lack of higher qualities of mind or spirit :
lacking higher values :
&a drab base way of life&basely
adverb baseness
defined for English-language learners
Examples of base in a sentence
Iron is a base metal.&a base and sneaky act that is a clear violation of international law&
Origin and Etymology of base
Middle English bas, from Anglo-French, from Late Latin bassus fat, short, low
First Known Use: 14th century
Related to base
Synonyms , , , , , , , , , , , , , , , , , , Antonyms , , , , , , , , Related Words , , , , , , , , ; , ; , , , ; , , , , , , ; , ; , , ; , , , , Near Antonyms , , , , , , ; , , , , , ; , , , , ; , ; , ; ,
Synonym Discussion of base
mean deserving of contempt because of the absence of higher values.
stresses the ignoble and may suggest cruelty, treachery, greed, or grossness &base motives&.
may connote crafty cunning, vulgarity, or immorality and regularly implies an outraging of one's sense of decency or propriety &refused to listen to such low talk&.
the strongest of these words, tends to suggest disgusting depravity or filth &a vile remark&.
Rhymes with base
, , , , , , , , , , , , , , , , , , , , , ,
Phrases related to BASE
Related Phrases
BASE Defined for Kids
a thing or a part on which something rests :
&the base of a statue& &the base of the mountain& 2
a starting place or goal in various games 3
any of the four stations a runner in baseball must touch in order to score 4
the main place or starting place of an action or operation &The company's base is in New York.& 5
a place where a military force keeps its supplies or from which it starts its operations &an air force base& 6
a line or surface of a geometric figure upon which an altitude is or is thought to be constructed &base of a triangle& 7
the main substance in a mixture 8
a number with reference to which a system of numbers is constructed 9
a chemical substance (as lime or ammonia) that reacts with an acid to form a salt and turns red litmus paper blue
basedbasing
to use as a main place of operation or action &The company is based in Ohio.&base on or
base upon :
to make or form from a starting point &It's based on a true story.&
baserbasest
of low value and not very good in some ways &base metals& 2
not honorable &“I'll appeal to his baser instincts, of which he has plenty.” — E. B. White, Charlotte's Web&
Medical Dictionary
bases \'bā-s?z\
that portion of a bodily organ or part by which it is attached to another more central structure of the organism &the base of the thumb&2a:
the usually inactive ingredient of a preparation serving as the vehicle for the active medicinal preparation &the fatty base of an ointment&b:
the chief active ingredient of a preparation—called also basis3a:
any of various typically water-soluble and bitter tasting compounds that in solution have a pH greater than 7, are capable of reacting with an acid to form a salt, and are molecules or ions able to take up a proton from an acid or are substances able to give up an unshared pair of electrons to an acid—compare b:
any of the five purine or pyrimidine bases of DNA and RNA that include cytosine, guanine, adenine, thymine, and uracil4:
based \'bāst\ adjective
Learn More about base
Thesaurus:
Medical Dictionary:
Spanish Central:
Britannica English:
Seen and Heard
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something that keeps a plot in motion
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