Gold Rises in All Currencies as Currency Devaluations Continue and Contagion Concerns Return

Gold

Gold closed above $1400/oz yesterday and has risen again today in most currencies and reached new record nominal highs in sterling (877.30/oz) and is targeting record nominal highs in euros . Competitive currency devaluations and currency debasement is seeing all fiat currencies fall in value against gold. Gold traded in Canadian dollars rose as much as 0.5 percent to C$1,422.169 an ounce, the highest price since 1971 and in India gold rose to an all-time high of 20,525 rupees. Gold imports by India, still the world’s biggest consumer, increased 25 percent to 20 metric tons in the week to yesterday due to a surge in demand during the Diwali festival.

Gold is currently trading at $1,418.30/oz, €1,019.63/oz, £878.20/oz.

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The total indebtedness of the UK, both public and private sectors will rise to GBP 10 trillion by 2015, and will remain equivalent to more than five times annual economic output, according to a report published by PwC.  This could lead to slow growth for decades and possibly stagflation. If interest rates were to rise, this debt would become extremely onerous and would likely see sterling come under pressure as happened in the 1970s.

Along with precious metals, German 10-year bunds have climbed for the second day as concerns that eurozone peripheral nations will struggle to reduce their budget deficits and remain solvent, led to increased demand for the safest assets. Concerns of contagion in financial markets has increased due to the scale of borrowing required by western governments in the coming years.

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The cost of insuring sovereign debt against default has risen according to prices for credit-default swaps, particularly in Spain. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments rose 2.5 basis points to an all-time high of 179.5. Spain’s default risk climbed 10.5 basis points to a record 275.5. Swaps on Portugal increased 3 basis points to 470, Ireland rose 3 basis points to 602, Greece was 4.5 higher at 873 and Italy was up 5 at 204.

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Silver

Spot silver climbed to the highest price since March 1980, rising as much as 0.6 percent to over $28 an ounce.

Silver is currently trading at $28.34/oz, €20.38/oz and £17.54/oz.

Platinum Group Metals

Platinum is trading at $1,783.50/oz, palladium is at $728/oz and rhodium is at $2,175/oz.

Mark OByrne

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