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Richard Russell: Sit tight in cash, gold, and gold shares
By Laura Humble
Bloomberg News Service
Thursday, June 24, 2004
http://quote.bloomberg.com/apps/news?
pid=10000086&sid=aJ3k1VbA1_Mk&refer=latin_america
LONDON -- Gold gained in London as the dollar weakened
against the euro and yen, making the dollar-denominated
metal more attractive as an alternative investment.
The dollar fell after reports of attacks in Iraq before the
U.S.-led coalition transfers power to an interim government
next week. Gold often gains during political turmoil, since
investors see it as a safe investment.
"The backdrop of geo-political tensions, particularly in
the Middle East, continues to underpin the market," said
James Moore, a U.K.-based analyst at TheBullionDesk.com,
in an e-mailed report.
Gold for immediate delivery in London rose $2, or 0.5
percent, to $396.75 an ounce at 10:13 a.m. The euro was
up 0.1 percent at $1.2110 and the yen was 0.7 percent
higher at 107.77 per dollar.
The yen gained after a government report showed growth
in Japan's services industries accelerated in April. The
euro strengthened when the French national statistics
office predicted Europe's third-biggest economy would
grow this at the fastest pace since the 2000.
Gold surged 19 percent in 2003 as the euro rose 20
percent and the yen 10 percent. The gains made the
metal cheaper for European and Japanese investors
and more attractive as a hedge against a weakening
dollar.
U.S. and Iraqi officials have said they expect insurgents
to step up violence in Iraq ahead of the planned handover
of power on June 30. The northern Iraqi city of Mosul was
targeted by four bombs today, killing a U.S. soldier and
at least six other people, Agence France-Presse reported,
citing a police officer.
Gold rises in times of turmoil because it's expected to hold
its value better than paper assets. Prices jumped 5.4
percent on Sept. 11, 2001, the day terrorists flew hijacked
airplanes into the World Trade Center and the Pentagon in
the U.S.
Doubts about the planned sale of 600 tons of gold by the
German Bundesbank also supported prices, Moore said.
Former Bundesbank head Ernst Welteke said in January
the bank wanted the sale option under the terms of a new
agreement between 15 central banks that limits total gold
sales to 2,500 tons over five years, starting in September.
Axel Weber, who took over after Welteke resigned in April,
yesterday cast doubt over the sale, saying it depends on
the outcome of discussions between the 12 euro-using
nations on currency reserves, the German weekly Die
Zeit reported.
The Bundesbank, the second-largest bullion holder after
the U.S. Federal Reserve, considers gold a form of
"natural hedging against strong swings in the dollar" and
is giving it "an important role" in the management of its
funds, Weber said, according to Die Zeit.
"With uncertainty over potential German gold reserve
sales overshadowing the market, support should be
found," Moore said.
The dollar may be boosted later by reports from the
United States, which may support the view that the
Fed will begin a series of rate increases next week,
Moore also said.
A report from the Commerce Department will probably
say durable goods orders rose last month and a report
from the Labor Department will probably say jobless
claims held below the year's average last week, adding
to signs the economy is accelerating. The Fed meets J
une 30 to decide rates.
"U.S. jobless claims and durable goods orders data
today are likely to spark some life into the currency
markets," said Moore.
Gold has already fallen 7.3 percent from a 15-year high
on April 1 as speculation the Fed will raise borrowing
costs has boosted the dollar. The Fed's overnight
lending rate has been at 1 percent, half the rate of that
in the 12-nation euro region, since June. Higher rates
in Europe helped boost the euro and gold last year by
attracting more savers.
Most other metals for immediate delivery in London
followed gold higher. Silver gained 3 cents, or 0.5
percent, to $5.89 and platinum advanced $2, or 0.3
percent, to $809.50. Palladium was unchanged at
$225.50.
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Free sites:
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http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
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Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
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