Gold’s London AM fix this morning
was USD 1,744, GBP 1,106.74, and EUR 1,327.65 per ounce.
Yesterday's AM fix was USD 1,738.00, GBP
1,102.23, and EUR 1,317.27 per ounce.
Gold consolidated on yesterdays
gain in Asia overnight and then rose in early European trading from below
$1,735/oz to $1,748.60/oz. A break above resistance
at $1,750/oz could see gold quickly challenge
$1,800/oz. However, there is also the possibility of a correction after the
large gains seen in January.
January 2012 - Gold, Silver, Currency and
Asset Performance Review
GOLD
Gold was again one of the top performing
assets and currencies in January. Its 11% gain in January surpassed the 10%
gains seen in all of 2010.
US Dollar Versus G10 Currencies and Gold
It was gold’s best start to the
year since the start of the bull market in 2000. There are conflicting media
reports as to whether this is the best January performance since 1980, 1983
or 1999.
Gold rose 11% in US dollar terms, 8.6% in
GBP terms and 9.8% euro terms or more correctly these fiat currencies fell by
this amount against immutable gold (*see various currency tables).
The strongest of major currencies in
January were the Brazilian real and Mexican peso both of which only fell 3.9%
against gold.
Next came the New Zealand dollar with a
4.5% fall and then the Australian dollar which fell 6.5% against gold.
The weakest currency in the month of
January was the US dollar which fell 11.5% against gold.
Other major currencies performance versus
gold were – the Australian dollar (-6.5% versus gold), British pound
(-8.6%), Canadian dollar (-8.7%), Swiss franc (-9%), Japanese yen (-9.3%),
euro (-9.8%).
The US dollar index was down just 1.1%
for the month to 79.304 showing once again what a poor and misleading foreign
exchange bench mark it is.
Euro Versus G10 Currencies and Gold
SILVER
Gold’s performance was matched and
surpassed by silver which again surprised many by rising 20% in value with
growing concerns of diminished silver stockpiles. The quasi monetary metal
silver thus became the best performing commodity and currency in January (see
below).
PGMs
The PGMs also rose in value with platinum
gaining 13.5% and palladium nearly 5%.
EQUITIES
Global equity markets saw gains with the
MSCI World index rising nearly 5% - its best January since 1984.
US benchmark indices rose with the
S&P up 4.36% - its best January performance since 1997. The DJIA was up
3.2% and the Nasdaq 100 saw strong gains of 8.5%.
While the DJIA rose 415 points in
January, just five stocks accounted for 322 of those points or 78% of the
rally. They were Caterpillar ($CAT), E.I. du Pont de Nemours & Company
($DD), United Technologies Corporation ($UTX), 3M ($MMM) and IBM ($IBM).
These gains were nominal and adjusted for
the sharp fall in the dollar, non US investors were not compensated for the
risk of holding US equities in January.
US Dollar Versus Major Currencies
There is also the concern that the rally
is due to the continuing negative real interest rates, the massive injection
of central bank liquidity and hopes of QE3 and continuing dollar debasement.
The FTSE’s gains were more muted
than the US gains with just a 1.96% gain and interestingly the FTSE ended at
the same level that it was on after the strong gains of the first day of
2012.
Given the FTSE is a better indicator of
global economic growth due to the high level of natural resource and mining
companies this is likely a sign that increasing pressure on the global
economy.
The Stoxx
Europe 600 Index, European benchmark gauge rallied 4%, the biggest January
gain since 1998.
In Germany the DAX surged 9.5% - the best
January on record for the benchmark. The CAC in France rose 4.4%.
In Asia, the MSCI's broadest index of
Asia-Pacific shares outside Japan was up 10 percent on the month, in its
first gain in three months.
Japan's Nikkei logged its best January
performance in 13 years gaining 4.1% in January, much better than its average
of 1.37% for the month between 1972 and 2011.
The Hang Seng
index put in its best January since 1996 and was up 10.6%.
Singapore's benchmark Straits Times Index
rose 9.7% in January, its best monthly performance
in more than two years and the second best in Southeast Asia after Vietnam
gained 10.4% on the month.
Singapore was Southeast Asia's second-worst
performer in 2011, after Vietnam, the worst.
The Shanghai Composite Index rose 3.3%
and India’s Sensex rose 11%.
BONDS
Government debt was bought in January
resulting in higher prices and lower yields for most longer
term sovereign debt.
Treasuries returned 0.3% in January and
Treasury Inflation Protected Securities gained 1.9%.
A measure of government bonds around the
world advanced 0.6 percent in January, while global corporate bonds returned
2.2 percent according to the indexes.
Yields on 10 year debt fell marginally in
the UK, Japan, France and Germany and remain near record low levels.
Yields on periphery debt also fell with
Italian 10 year yields plummeting from over 7% to 5.7%.
Portugal was the exception and 10 year
yields surged from 13.4% to over 16%.
Portugal looks set to become the new
Greece and a new contagion risk to the Eurozone.
Continuing debt monetization is likely a
primary factor for some of the gains seen in bond markets.
COMMODITIES AND BALTIC DRY INDEX
NYMEX (WTI) crude fell 0.5% while Brent
crude rose 4% narrowing the gap between the two global benchmarks.
Natural gas fell 16.9% while gasoline and
heating oil rose 8.6% and 5.2% respectively.
Copper (US) rose 10.4% and LME copper
rose 12%, while aluminum (LME 3 month) rose 13%.
Corn fell 1% while wheat rose 2.3%.
Soybeans were down 0.6% while sugar rose
1.46%.
Cotton was up 1.78%. Rough rice fell
5.8%.
The Baltic Dry Index plummeted a shocking
61% in January which does not bode well for the global economy in 2012.
CONCLUSION
January 2012 again showed the vital
importance of being globally diversified with global equities, global
sovereign and corporate bonds (high credit, low duration) and of course
allocations to gold and silver bullion.
This real diversification will protect
against the heightened degree of geopolitical, macroeconomic, monetary
(currency) and systemic risk in 2012.
For breaking news and commentary on
financial markets and gold, follow us on Twitter.
NEWS
(Reuters)
Gold steady; U.S., Europe data eyed
(MarketWatch)
Gold ends higher, up 11% on month
(BusinessWeek)
Gold Climbs to Seven-Week High in Best Start to Year
Since 1983
(Reuters)
Gold on track for biggest gain since August
COMMENTARY
(ZeroHedge)
Gold, Silver Winning 2012 Asset Return Race With 11
Months Left
(SeekingAlpha)
Central Banks Shifting To Gold
(SeekingAlpha)
Silver Could Rise Dramatically In 2012
(KingWorldNews)
Leeb - Silver to Break $100 This Year & Gold Bull on the
Move
(KingWorldNews)
Caesar Bryan - Tidal Wave of Gold Buying as Confidence
Lost
(MaxKeiser)
Video: Silver Market and Inflation
Mark
O’Byrne
Goldcore
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