Crude oil briefly dipped below $55 a barrel yesterday for the first time in 22 months prompted by reports, warning that demand will be significantly weaker in 2009 due to the global economic downturn.

Despite this, Gold gained slightly on the news that Chinese investors’ demand had surged in the first nine months of 2008. Gold is currently trading at $728 after closing in New York on Wednesday at $710.30.

In wealth preservation terms, Gold is still doing an admirable job. The metal is up 7 per cent since the start of the financial crisis in August 2007. This contrasts with losses of over 40% on the S&P 500 index. The situation looks even better in Europe. In Sterling terms Gold is up 46% since last August and 17% in Euro terms.

Sterling took another hammering yesterday and hit a 6 and a half year low against the Dollar and an all time low against the Euro. Analysts believe that this is due to predictions that the Bank of England will cut rates sharply.

On the eve of the G20 summit it is likely that the 3 main themes will be: economic policy, the need to rethink global financial regulation and the need to modernise international financial institutions. National Leaders are expected to agree a statement on the origins of the financial crisis but in a way that does not solely ascribe blame on the U.S. This would seem to be in line with comments from 5 of the most powerful hedge fund managers, including George Soros, who blamed the current crisis on the “system itself” and warned that excessive regulation would “stifle the best innovative qualities” of the market.

George Soros also said that recession was inevitable. It must have been a hoot to be in that meeting!