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Business Title: Gold Hits Record Above $1,340/oz As Dollar Slides; Private Bankers Advise: "Just Say No To Gold" By Frank Tang NEW YORK | Tue Oct 5, 2010 3:25pm EDT NEW YORK (Reuters) - Gold jumped nearly 2 percent on Tuesday, its biggest one-day rise since May, resuming its march to record highs as the dollar tumbled and currency market volatility ignited safe-haven buying. Silver surged 3 percent to a 30-year high and platinum group metals also rallied with the entire commodities complex, after the Bank of Japan said it would pump more funds into the country's struggling economy and keep interest rates virtually at zero. Moves by countries around the world toward easier money indicate "not only the amount of liquidity that has been put into the system will remain, but there is a high likelihood of significant level of liquidity being added into the system," said Frank McGhee, head precious metals trader at Integrated Brokerage Services. McGhee said expected monetary easing in the United States will result in major devaluation on the dollar, which benefits gold. Spot gold rose $25.30, or 1.9 percent, to $1,340.50 an ounce at 2:59 p.m. EDT, off an intra-day high of $1,341.20, its seventh record in the past eight sessions. U.S. gold futures for December delivery settled up $23.50 at $1,340.30 an ounce. The dollar .DXY tumbled to a near nine-month low against a basket of six major currencies, pressured by broad-based demand for the euro. The usual inverse relationship between gold and dollar has showed signs of strengthening of late. The 25-day correlation between the metal and the U.S. currency has increased to a negative 0.5, the strongest inverse link since May. Brazil on Monday doubled a tax on foreign investors buying local bonds in an attempt to curb a currency rally that has turned into an issue in the South American country's presidential race. On charts, gold's two-percent rally on Tuesday lifted prices above its upper resistance of a rising channel which started back in July. But some traders said gold's upside could be limited. They noted slower physical demand, a third straight outflow of funds from the world's biggest gold ETF and improved demand for U.S. equities, which rallied 2 percent on Tuesday. BNP Paribas analyst Anne-Laure Tremblay said the euro may see a correction later this year on deflation risks in the euro zone, and added that stronger risk appetite could favor equities and other assets besides gold. PARABOLIC GOLD? Integrated Brokerage Services' McGhee said gold's sharp rallies are starting to turn parabolic, and that could trigger a price correction. "It's almost impossible to pick a level when it will run out of steam. When it does, it will turn around very quickly, because it has nothing to support from a technical standpoint," McGhee said. Demand for physical gold retreated as prices rose again. Buying in main gold consumer India was muted as the weaker rupee pressured local buyers. Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, declined for a third session, while those of the largest silver ETF, the iShares Silver Trust dipped from record highs. Silver surged nearly 4 percent to $22.83 an ounce, near its 30-year high at $22.87. Silver continued to outperform gold, with the number of ounces of silver needed to buy an ounce of gold slipping to a one-year low at around 59. (Graphic: link.reuters.com/hun72k) Platinum, buoyed by strength in gold, hit a 4-1/2 month high at $1,699 an ounce and was trading up 1.6 percent at $1,691.50, while palladium rose 3.2 percent to $575.50. Private Bankers Advise: "Just Say No To Gold" By Joseph A. Giannone NEW YORK | Tue Oct 5, 2010 2:21pm EDT NEW YORK (Reuters) - Gold is all the rage as investors flee uncertain markets and worry about inflation, but some bankers to the very rich do not take a shine to the precious metal. Gold prices have spiked 22 percent this year, with investors sending gold futures to record highs of more than $1,337 on Tuesday. The weak dollar, volatility in currency markets and deficit worries boosted demand for the metal as a safe store of value. Private banking executives, say gold's glittering price tag is or should give their wealthy clients pause. "We're not really recommending gold right now, just because it's at a level where there are things driving it beyond the types of things (where) that we can add a lot of value," U.S. Trust President Keith Banks said at the Reuters Global Private Banking Summit in New York. Instead, Banks said gold prices may reflect the surge in demand for gold exchange-traded funds, listed shares that purchase physical gold, and broader worries about government spending leading to rapid price inflation. "So what exactly is leading to gold at the levels it's at? Your guess is as good as mine," said Banks, who runs the Bank of America (BAC.N) private bank unit. The SPDR Gold Trust ETF (GLD.P), which lets retail investors more easily bet on gold, has surged 21 percent this year to a record high of 130.71. The fund shares are up more than 50 percent since the end of 2008. Wealthy families are more interested than ever in owning commodities such as metals and energy, assets that do not move up and down in step with stock and bond prices. They also offer a hedge against inflation, since their values rise with prevailing prices. There are many critics who warn gold is the latest frenzy and is doomed to collapse. "With gold being over $1,300 an ounce now, you have people who are asking whether, first, 'Is it another bubble?' and then, 'How far can I ride that bubble?,'" Credit Suisse Americas private banking chief Anthony DeChellis said. Bessemer Trust Chief Executive John Hilton said his New York wealth management firm allocated a single-digit percentage of its real return fund into gold. For some clients, he acknowledged, that was not enough. "We have clients who have made very large individual purchases of gold. Sometimes they'll just say they're doing it, and they'll ask us if we can hold it for them, but we haven't made any large purchases of gold directly for our clients," said Hilton, whose firm manages about $56 billion. U.S. private bankers, to be sure, also told the Summit they do recommend investments in a range of commodities. "We have been a proponent of having an exposure to commodities. The bank is optimistic about the economic recovery, and commodities is a way to play global growth," said U.S. Trust's Banks. U.S. Trust formed its Specialty Asset Management group, which buys hard assets on behalf of its wealthy clients -- anything from real estate, timberland and farmland to oil and gas properties. U.S. Trust will buy and sometimes hire people to operate these assets. The business, which manages about $16 billion of assets, is seeing strong interest from clients, he said. "These are assets that I think people can feel good about, that are probably not going to track the more typical areas, and it's just a unique opportunity," Banks said.
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#1. To: Brian S (#0)
Excellent! Dems trash the US dollar and, causing oil and commodities to skyrocket and gold goes nuts. Obamanomics is a fucking failure.
Clinton and Cuomo are the true bandits who lit the fuse to this economic crisis we're now in. All in the name of getting more minorities in houses: http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=12554
Exactly. Food and fuel prices are skyrocketing and incomes are stagnant.
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