Gold, Silver Hit New Highs on Seasonal Demand
Business Standard
Surpassing all previous records, prices of both gold and silver today hit all-time high levels on heavy buying by stockists and jewellers for the current marriage season, amid a firm global trend.
While gold touched a new peak of Rs 20,800 per 10 gm by adding Rs 200, silver rose by Rs 100 and rallied to an all-time high level of Rs 42,500 a kg. Both the precious metals have been in demand for the last six sessions on brisk buying by stockists and jewellers to encash on the ongoing marriage season.
A firm global trend further fuelled the uptrend. Gold in overseas markets, which sets prices on the domestic front, added $1.50 to $1,377.90 an ounce. Silver also rose 0.4 per cent to $27.61 an ounce.
On the domestic front, gold of 99.9 per cent purity surged by Rs 200 to Rs 20,800 and 99.5 per cent purity by Rs 210 to Rs 20,670 per 10 grams, respectively. Both varieties of the metal have recorded a gain of Rs 380 in the previous five trading sessions. Sovereign followed suit and added Rs 50 to Rs 16,500 per piece of eight gram.
With the general firm trend, silver ready gained Rs 100 to Rs 42,500 a kg on increased offtake by industrial units, while weekly-based delivery shed Rs 20 to Rs 41,910 a kg. Silver coins remained at a record level of Rs 45,900 for buying and Rs 46,000 for selling of 100 pieces.
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Unlike Gold – Stimulus Is Effective Only Under Certain Circumstances
GoldSeek
A recently published paper that studied the stimulus efforts in 44 countries showed some interesting findings. Ethan Ilzetzki of the London School of Economics and Enrique G. Mendoza and Carlos A. Vegh of the University of Maryland argued in their National Bureau of Economic Research paper that fiscal stimulus can be quite effective in low-debt countries with fixed exchange rates and closed economies.
But stimulus measures are generally not as effective in countries like the U.S. with high debt and floating exchange rates. The authors of the paper pointed to a series of specific circumstances that throw a wrench into the effectiveness of increasing public spending: How much of the stimulus money ends up flowing abroad? How do investors respond to fear of future interest rate increases?
New York Times columnist David Brooks mentioned the study and wrote in a column this week:
When you look around the world at the countries that have come through the recession best, it’s not the countries with the brilliant and aggressive stimulus models. It’s the ones like Germany that had the best economic fundamentals beforehand.
It all makes one doubt the wizardry of the economic surgeons and appreciate the old wisdom of common sense: simple regulations, low debt, high savings, hard work, few distortions. You don’t have to be a genius to come up with an economic policy like that.
Our take is that the Fed knows that the stimulus is going to work as advertised, but they decided to go with it anyway, simply because they are desperate.
Speaking of geniuses and economic surgeons, in an unusual move, top Fed officials came out this week to defend their recent move to inject $600 billion more into a sluggish economy. The Federal Reserve has come under attack both at home and abroad with a torrent of criticism from foreign leaders, Congressional officials, economists and Alan Greenspan, the former Fed chairman.
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Gold Jumps Towards Euro Record as Irish Crisis Hits Spanish Bond Sale
International Business Times
Gold held onto yesterday's sharp jump against all major currencies in Asia and London on Wednesday, trading within 2% of this year's record highs for Euro and Sterling investors Buying Gold as global stock markets bounced.
Crude oil also rallied from Tuesday's sell-off, and Silver Prices stood little changed from last week's finish at $27.50 per ounce.
Prices for default insurance on Eurozone debt jumped - and Spain was forced to delay the sale of €13.5 billion in state-guaranteed bonds - after German chancellor Merkel repeated her call for bond-buyers to bear some level of bail-out costs.
Two South Korean civilians were meantime found dead following yesterday's attack by the Stalinist North on the disputed island of Yeonpyeong.
"Geopolitical news typically causes knee-jerk reactions in the gold market, with gains never sustained," says MKS Finance in Geneva, Switzerland today, citing the fears the Eurozone debt crisis could spread from Ireland have continued to support gold."
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China, Russia Quit Dollar
China Daily
Su Qiang and Li Xiaokun
St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
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