Global investors had to muster the courage to keep calm as news of Cyprus’ proposed partial theft of all bank deposits took Wall Street by surprise, closed the country’s banks and drove the price of gold higher.
Meantime at the World Economic Forum of policy-makers and business leaders in Davos, Switzerland, "We are buying gold and will continue to pursue this course," said Russia's first deputy chairman Alexei Ulyukayev today.
Spot market gold prices rallied to $1,781 per ounce ahead of Wednesday's US session, recovering from slight losses earlier in the day to stay in line with recent trading, while stock markets were broadly flat and the Euro reversed earlier gains.
The fix which El-Erian and central banks everywhere now hope for might not in fact work. It sure didn't reverse Japan's depression two decades ago. And either way, it hasn't yet shown up in the West, where "austerity" is now being challenged by a growing political consensus.
El Gordo – the fattest prize in the world's fattest lottery – just keeps getting fatter. Or so its promoters claim. But even the fattest prize-total to date looks a real skinny-ribs stood next to El Tro, the storm of money now thundering onto Europe's banks.
The World Gold Council (WGC) reaffirmed the power of the Love Trade in its 2011 Gold Demand Trends report released earlier this month. Gold demand grew 0.4% in 2011 despite a 28% year-over-year increase in bullion’s average price.
More money means more inflation. Meaning that injections of money are sure to raise the cost of living. They're also sure to depress the currency's exchange rate, especially if the injection goes unsterilized.
Precious metals rose across the board Thursday morning, extending yesterday's sharp jump in New York trade. Today marks expiry for March options on US gold futures, with the bulk of interest between $1,750 and $1,800 per ounce.
China's massive trade surplus is fast shrinking, however. The rate of foreign-currency hoarding is slowing right alongside, but its gold imports just overtook domestic mine output for the year as a whole.