Tuesday, Oct 16, 2007
Those mischievous Grannies are at it again!
Telegraph: Japan's grannies drive up gold prices
Gold has soared to a fresh 28-year high of $760 (£372) an ounce on fears of global currency disorder and a surge of buying by Japanese investors using exotic trading signals.
Traders report a sudden burst of activity on the TOCOM gold futures markets in Tokyo as the price breaks through the psychological barrier of 3,000 yen (£12.52) per gramme, the measure used by the Japanese to trade gold.
Posted by tyrellcorporation @ 09:13 AM (715 views) Add Comment
10 Comments
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1. sold 2 rent 1 said...
"The net long positions on the US futures markets are at all-time highs. They have been at extreme levels for four weeks and when that happens you can be sure there will be a correction. It could be any time now,"
If I had to guess about the financial outlook for the next month or so it would be :
- currency crises around the world (Eastern Europe, the Middle East and emerging Asia)
- stocks to fall but not another 87 crash - more 20% down over 6 weeks
- gold may correct in the short term because its rise is clearly mainstream now.
2. cornishman said...
@S2R1
For there to be a correction in the gold price, you have to be confident about the value of whatever it is that you swap your gold for. Who can be confident about anything at the moment?
3. sold 2 rent 1 said...
Cornishman,
I am long term bullish on gold.
The USD may strengthen as the GBP and EUR fall.
This upleg in gold has been driven by the falling dollar.
The most powerful uplegs in gold happen when all the major currencies fall together - which is not that far away now.
4. sold 2 rent 1 said...
Are these the same grannies that are in one way yen carry trade bets?
If so, when the yen rises, they will sell gold to cover their yen carry trade losses.
5. d'oh said...
I noticed the Australian dollar is down today buy a significant jump - Japanese grannies' selling AUD and buying gold? i.e. one side of carry trade unwinding into gold? Anyone with more knowledge care to comment?
6. Jonb said...
I personally think that gold is an even worse investment than property.
With property, there is the chance of receiving some rental income, even if it is only about 2% of the purchase price, whereas with gold, you receive no income, and have to pay for storage and insurance.
Ultimately, investment in both are based on the idea that someone is going to come along behind you and pay more than what you paid for it, and I can't see that much of an increase in demand for jewellery and electrical contacts.
Just like the property bubble followed the collapse of the dot.com bubble, it looks like the gold bubble could follow the collapse of the property bubble.
7. sold 2 rent 1 said...
Japanese grannies were the last to the yen carry trade party.
They must be seen as followers and not leaders in trends
I can't believe all these grannies will be successful in exiting the carry trade in time
Gold is very volatile at the moment
http://www.kitco.com/charts/popup/au24hr3day.html
14 oct 748 low
16 oct 767 high
16 oct 755 low
8. Tom101 said...
So what would be a safe currency not likely to be effected by this turmoil too much.
Swiss Franc?
Scandinavian Kroner?
9. sold 2 rent 1 said...
Jonb,
"Just like the property bubble followed the collapse of the dot.com bubble, it looks like the gold bubble could follow the collapse of the property bubble"
You are correct here. Gold will be an asset bubble.
It still has at least 3 or 4 years to run before it peaks though.
People buy gold when they worry about "return OF investment" rather than "return ON investment"
10. alan said...
I moved my pension fund out of equities over a week ago. I think the stock market is due for a 20% drop (like other posters on this site).
As for Japanese grannies buying gold, I thought they were buying Oil. Have you seen the prices today..!