News Header

 

Analysts: Increased Demand for Safe Haven Assets

Release Date: 
Wednesday, October 26, 2011

The price of gold reached a one-month high and saw a four-day streak of gains as investors bought the metal on uncertainty over the EU summit of finance ministers. Domestically, U.S. consumer confidence (which measures confidence among shoppers in the world's largest economy) fell to its lowest in 2-1/2 years in October, helping gold prices. The metal traded at $1717.60 per ounce at 7:17 a.m. Pacific Time on the New York Spot Market.

Yesterday’s cancellation of a meeting among European finance ministers dampened hope that the EU will address its debt and banking crises. The recapitalization of Europe’s debt-exposed banks remains in limbo until other elements of the rescue package are settled, according to sources close to the contentious finance talks.

Analysts noted that demand for gold as a safe haven asset is rising with increased uncertainty in Europe. "The catalyst was the finance ministers' meeting cancellation…that really just unleashed a very strong wave of safe-haven buying," said Jim Steel, a precious-metals analyst with HSBC in New York, discussing gold.

"Safe-haven status is re-emerging," said Natalie Robertson, an analyst at Australia & New Zealand Banking Group Ltd. "Sentiment is still very, very fragile at the moment and today will continue to be uncertain. Everyone’s waiting on the developments out of Europe."

"The size of the debt issues are unlikely to go away regardless of what policy makers decide," analysts at TheBullionDesk.com in London wrote in a report. "Given this uncertainty we are not at all surprised gold is attracting fresh safe-haven buying."

(Sources: "Breaking Chains: Gold, Stock Prices Part Ways," Wall Street Journal, October 26, 2011; "Gold reprises haven role in four-day rally," Reuters, October 26, 2011; "Gold May Extend Climb Above $1,700 as European Crisis Concern Spurs Demand," Bloomberg, October 25, 2011;)

News Footer

 

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.