Gold over $900 USD / OzT

[Sapiens]

http://www.bloomberg.com/apps/news?p...XmM&refer=home

Gold, Platinum Rise to Record on Declining Dollar; Silver Gains

By Claudia Carpenter

Jan. 14 (Bloomberg) -- Gold and platinum rose to records and silver extended its rally to the highest in 27 years as a declining dollar increased demand for precious metals as alternatives to stocks and bonds.

The dollar fell as traders increased bets that the Federal Reserve will lower U.S. interest rates to avoid a recession. Gold has gained 9 percent this year and the dollar has fallen more than 2 percent against the euro, to a seven-week low.

``We're in a falling rate environment. I think that works in gold's favor,'' Richard Urwin, London-based head of asset allocation at BlackRock Investment Management, said in an interview with Bloomberg Television. ``We're probably in an environment in which on average the dollar is going to depreciate. Gold is a good hedge against it.''

The metal for immediate delivery rose $12.31, or 1.4 percent, to $907.71 an ounce at 1:38 p.m. in London. It earlier reached $914.30.

Gold futures for February delivery rose $11.60, or 1.3 percent, to $909.30 an ounce at 8:38 a.m. on the Comex division of the New York Mercantile Exchange. The price earlier reached $915.90, the highest ever for a most-active contract.

...

[BiscayneSunrise]

Re: Gold over $900 USD / OzT

http://malaysia.news.yahoo.com/rtrs/...s-21231dd.html



China gold futures surge to near $1,000 in debut
Reuters - Thursday, January 10
Gold futures trade totalled over 27 billion yuan ($3.77 billion) - SHANGHAI/BEIJING, Jan 9 - China's first gold futures contract surged to nearly $1,000 an ounce in its Wednesday debut, as enthusiastic new bullion bulls bid a hefty premium over global peers the same day spot gold cruised to a new record high.


Local traders welcomed the contract as a fresh opportunity for Chinese investors to diversify their porfolios, raising bullion's profile in a country where strong returns from property and real estate markets have overshadowed alternatives.

That in turn could spur Chinese interest in holding gold as an investment, adding to a global demand boom for the safe-haven metal that helped push spot prices 30 percent higher last year and set a series of records over the past week.

The international spot gold price hit $891.40 an ounce on Wednesday, its second high in a row.

"Gold is bullish in a long-term outlook. Concerns on inflation, U.S. dollar depreciation and rising energy prices are spurring market participants, including Chinese investors, to put their money into gold," said analyst Wang Zheng at Fubao Metals.

Inflation in China rose to an annual rate of 6.9 percent in November, an 11-year high, and Chinese who fear a further erosion in their purchasing power rushed to the latest financial fad.

The June futures contract opened at 230.95 yuan a gram, up nearly 10 percent from the base price of 209.99 yuan set by the Shanghai Futures Exchange. It briefly hit its upper cap of 230.99 yuan before retreating to 223.30 yuan a gram by the daily close.

That is equivalent to about $956.34 an ounce at current exchange rates, implying Chinese investors expect a rise of more than 7 percent in gold prices in dollar terms.

But when factoring in the steady appreciation in the yuan currency that dealers expect, Shanghai's June futures are at nearly $1,000 an ounce with the yuan at 7 per dollar -- well above $903.60 an ounce for June futures in New York.

A preference among Chinese for momentum trading aided gains, while global spot prices were buoyed by investor demand following a poor start to the year on Wall Street and in Asian stock markets as well as further signs of weakness in the U.S. economy.

"There are a lot of relatively inexperienced investors looking to hedge against and the message has always been in times of inflation 'buy gold.' That will attract a lot of individuals to the new Shanghai contract," said Jonathan Barratt of Commodity Broking Services in Australia.


The Shanghai Futures Exchange's efforts to deter individuals from speculating too heavily on the contract did not dampen enthusiasm for the long-awaited launch.


REGULATION PREMIUM

Overseas analysts attributed the premium to the traditional allure of gold and unfamiliarity with its risks among Chinese investors, who last year propelled Shanghai's main stock index <.SSEC> 97 percent higher.

"The price shouldn't be a hundred bucks higher. It's not logical," said Ellison Chu, senior manager at Standard Bank in Hong Kong.

Traders also said the premium may be caused by the higher borrowing costs that Chinese speculators face.

Moreover, only large banks can import gold to China, and individuals are forbidden from delivering physical gold against their positions, making it potentially very expensive to close out a short position if prices soar.

"There is a huge advantage to holding a long position in the market, because of the difficulties of going short," said a Shanghai-based trader. "There should be some premium for this reason, I would call it a 'regulation premium' or barrier."

Traders expected Shanghai futures to converge with international futures as the expiry date nears.

The key gold futures contract for December 2008 delivery <0#JAU:> on the Tokyo Commodity Exchange rose as high as 3,173 yen per gramme on Wednesday, the highest for a benchmark since March 1984.



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[Tulpen]

Re: Gold over $900 USD / OzT

A situation similar to the Shanghai stock exchange where the A shares are much more expensive than the equivalent H shares in Hong Kong.

Of course ludicrous but no issue, it seems, for Chinese gamblers.

[BiscayneSunrise]

Re: Gold over $900 USD / OzT

Understood about Chinese gamblers but as an arbitrage play, which side will meet the other? My guess is the US trade will catch up to the Chinese market.

[Mega]

Re: Gold over $900 USD / OzT

They heard "Mega" bought Gold ;)
Mike

[Mega]

Re: Gold over $900 USD / OzT

Why do peple say its over priced.....the last recors was $875..........Yes 27 YEARS AGO!

Factor in inflation and that would be $2300 today.............Over priced?..............Nothing of the sort!
Mike

[grapejelly]

Re: Gold over $900 USD / OzT

Why do peple say its over priced.....the last recors was $875..........Yes 27 YEARS AGO!

Factor in inflation and that would be $2300 today.............Over priced?..............Nothing of the sort!
Mike

gold is not over priced and it's not a "bubble" either. What's going on is quite reasonable because of the fundamentals. We will at some point see a deluge of cash going into gold. Another bubble may eventually form although EJ has said that a bubble is impossible without government intervention ...but granting this, the government *may* start inflating like crazy...

That's my bet. So gold is quite low, actually. Even though I wouldn't be surprised to see it correct to $760 for awhile, I can see it go to $2000 in the next 24 months. And every $100 increment will come with articles and media pundits saying it's gonna drop like a stone.

[Jim Nickerson]

Re: Gold over $900 USD / OzT

gold is not over priced and it's not a "bubble" either. What's going on is quite reasonable because of the fundamentals. We will at some point see a deluge of cash going into gold. Another bubble may eventually form although EJ has said that a bubble is impossible without government intervention ...but granting this, the government *may* start inflating like crazy...

That's my bet. So gold is quite low, actually. Even though I wouldn't be surprised to see it correct to $760 for awhile, I can see it go to $2000 in the next 24 months. And every $100 increment will come with articles and media pundits saying it's gonna drop like a stone.

gj, it strikes me that you are one of the most outspoken bulls on gold of those who contribute on iTulip. You may have stated somewhere already, and I forgot or missed it, just what allocation of your liquid assets you have in gold, and I think you are a bullion man + junior miners. It is too invasive to ask you what you have allocated to gold and j-m's? If you don't wish to disclose it, that is fine.

[Tulpen]

Re: Gold over $900 USD / OzT

Understood about Chinese gamblers but as an arbitrage play, which side will meet the other? My guess is the US trade will catch up to the Chinese market.

I think the opposite. Look at for instance CAF, a fund that trades the A shares on the Shanghai exchange. It trades at a big discount of around 25% and approaches the value of the equivalent H shares in Hong Kong.