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What do May’s new closing highs for gold mean for investors in 2010…?

IT’S PRETTY RARE for gold to make a new monthly high for the year in May, let alone for all time.

But when it does (or so history suggests), new buyers might expect better-still prices come Christmas – and gold in 2010 just happened to finish May with a new record monthly close against all major currencies bar the Japanese Yen and Australian Dollar.

Only 10 previous Mays since 1968 have finished with the best monthly close of the year-so-far. More typically, the "summer doldrums" had already begun, with prices peaking in March or April, before dipping or moving sideways and then picking up as autumn drew on.

After seven of those 10 previous May highs – all but one of which (1993) came during longer-term bull runs in gold – the Dollar gold price rose again to hit new month-end highs for the year by the end of December. Overall, the average year-end gain for May’s buyers in those 10 years currently stands above 14.7%.

Note: That’s skewed by the blow-out jump of 1979 – gold’s final blow-out during its prior bull run – with a near-94% rise.

What with Bullion Vault users growing their privately-owned hoard above 20 tonnes of gold bullion last month – as well as German coin dealers being emptied, the US Mint enjoying a record month for Gold Eagles, and London’s wholesale market having to cope with a one-day purchase of 30 tonnes by the SPDR Gold Trust – it’s little surprise that May 2010 also finished with a new record high monthly close on Bullion Vault’s Global Gold Index.

Beginning at 100 on 4th Jan. 2000, the GGI prices gold against a weighted basket of the world’s top 10 currencies by GDP. The Global Gold Index thus removes currency noise and replaces it with a deeper "paper vs. metal" growl. It shows the (entirely notional) price of gold for those 2.5 billion people who account for over two-thirds of world economic activity…

As you can see, the GGI doubled between Jan. 2000 and the start of 2006, and has since doubled again. Last month, the GGI rose 5.2% from the end of April 2010.

The constituent Gold Prices – in descending order of GDP weight in the index – are shown below next to their May 2010 gains.

Most telling, perhaps, is that jump against the Euro. Long considered a serious challenger to the US Dollar’s status as world currency No.1, the Euro is in fact the world’s most heavily-issued currency…used by 330 million people across 16 of the world’s richest nations…and accounting for around one-third of emerging-market central bank reserves.

If, like Iran today and Russia last month, those Asian central banks decide to reduce their Euro exposure, they’ll no doubt raise their Dollar holdings. We’d expect them also to add a little more gold to their comparatively small stashes, too.

Buying Gold today…?

Source:Gold's Record-Breaking May

What do May’s new closing highs for gold mean for investors in 2010…?

IT’S PRETTY RARE for gold to make a new monthly high for the year in May, let alone for all time.

But when it does (or so history suggests), new buyers might expect better-still prices come Christmas – and gold in 2010 just happened to finish May with a new record monthly close against all major currencies bar the Japanese Yen and Australian Dollar.

Only 10 previous Mays since 1968 have finished with the best monthly close of the year-so-far. More typically, the "summer doldrums" had already begun, with prices peaking in March or April, before dipping or moving sideways and then picking up as autumn drew on.

After seven of those 10 previous May highs – all but one of which (1993) came during longer-term bull runs in gold – the Dollar gold price rose again to hit new month-end highs for the year by the end of December. Overall, the average year-end gain for May’s buyers in those 10 years currently stands above 14.7%.

Note: That’s skewed by the blow-out jump of 1979 – gold’s final blow-out during its prior bull run – with a near-94% rise.

What with Bullion Vault users growing their privately-owned hoard above 20 tonnes of gold bullion last month – as well as German coin dealers being emptied, the US Mint enjoying a record month for Gold Eagles, and London’s wholesale market having to cope with a one-day purchase of 30 tonnes by the SPDR Gold Trust – it’s little surprise that May 2010 also finished with a new record high monthly close on Bullion Vault’s Global Gold Index.

Beginning at 100 on 4th Jan. 2000, the GGI prices gold against a weighted basket of the world’s top 10 currencies by GDP. The Global Gold Index thus removes currency noise and replaces it with a deeper "paper vs. metal" growl. It shows the (entirely notional) price of gold for those 2.5 billion people who account for over two-thirds of world economic activity…

As you can see, the GGI doubled between Jan. 2000 and the start of 2006, and has since doubled again. Last month, the GGI rose 5.2% from the end of April 2010.

The constituent Gold Prices – in descending order of GDP weight in the index – are shown below next to their May 2010 gains.

Most telling, perhaps, is that jump against the Euro. Long considered a serious challenger to the US Dollar’s status as world currency No.1, the Euro is in fact the world’s most heavily-issued currency…used by 330 million people across 16 of the world’s richest nations…and accounting for around one-third of emerging-market central bank reserves.

If, like Iran today and Russia last month, those Asian central banks decide to reduce their Euro exposure, they’ll no doubt raise their Dollar holdings. We’d expect them also to add a little more gold to their comparatively small stashes, too.

Buying Gold today…?

Source:Gold's Record-Breaking May

What do May’s new closing highs for gold mean for investors in 2010…?

IT’S PRETTY RARE for gold to make a new monthly high for the year in May, let alone for all time.

But when it does (or so history suggests), new buyers might expect better-still prices come Christmas – and gold in 2010 just happened to finish May with a new record monthly close against all major currencies bar the Japanese Yen and Australian Dollar.

Only 10 previous Mays since 1968 have finished with the best monthly close of the year-so-far. More typically, the "summer doldrums" had already begun, with prices peaking in March or April, before dipping or moving sideways and then picking up as autumn drew on.

After seven of those 10 previous May highs – all but one of which (1993) came during longer-term bull runs in gold – the Dollar gold price rose again to hit new month-end highs for the year by the end of December. Overall, the average year-end gain for May’s buyers in those 10 years currently stands above 14.7%.

Note: That’s skewed by the blow-out jump of 1979 – gold’s final blow-out during its prior bull run – with a near-94% rise.

What with Bullion Vault users growing their privately-owned hoard above 20 tonnes of gold bullion last month – as well as German coin dealers being emptied, the US Mint enjoying a record month for Gold Eagles, and London’s wholesale market having to cope with a one-day purchase of 30 tonnes by the SPDR Gold Trust – it’s little surprise that May 2010 also finished with a new record high monthly close on Bullion Vault’s Global Gold Index.

Beginning at 100 on 4th Jan. 2000, the GGI prices gold against a weighted basket of the world’s top 10 currencies by GDP. The Global Gold Index thus removes currency noise and replaces it with a deeper "paper vs. metal" growl. It shows the (entirely notional) price of gold for those 2.5 billion people who account for over two-thirds of world economic activity…

As you can see, the GGI doubled between Jan. 2000 and the start of 2006, and has since doubled again. Last month, the GGI rose 5.2% from the end of April 2010.

The constituent Gold Prices – in descending order of GDP weight in the index – are shown below next to their May 2010 gains.

Most telling, perhaps, is that jump against the Euro. Long considered a serious challenger to the US Dollar’s status as world currency No.1, the Euro is in fact the world’s most heavily-issued currency…used by 330 million people across 16 of the world’s richest nations…and accounting for around one-third of emerging-market central bank reserves.

If, like Iran today and Russia last month, those Asian central banks decide to reduce their Euro exposure, they’ll no doubt raise their Dollar holdings. We’d expect them also to add a little more gold to their comparatively small stashes, too.

Buying Gold today…?

Source:Gold's Record-Breaking May

The world’s top 10 currencies have dropped 75% vs. gold in the last 10 years…

WE’VE SAID IT BEFORE, but that’s never stopped us saying anything again in the past.

The bull market in gold starting 10 years ago is about much more than the Dollar – a fact that investors and savers worldwide might want to consider in 2010 if the US currency continues to rally.

And given G7 interest rates averaging 0.4% too (on Reuters‘ maths), gold looks likely to keep drawing strong bids worldwide, too.

BullionVault’s Global Gold Index tracks the price of gold against the world’s top 10 currencies.

Weighted by each issuing state’s GDP, its 2010 make-up is based on the latest IMF forecasts. Meaning that the basket is led, as always, by the US Dollar (32%), with the Euro (27%) in second place. Behind that, China (12%) overtakes Japan (11%, down from 18% a decade ago) for the first time this year.

The GGI then includes the price of gold in British Pounds (5%), Russian Roubles (3%), Brazilian Real (3%), Canadian Dollars (3%), Indian Rupees (3%) and finally Mexico Pesos (2%)…thus covering well over two-thirds of the global economy and more than half its population.

Its value? Think of the GGI as gold minus the noise. The index is significantly less volatile on a daily basis than the Gold Price in Dollars, Euros or Sterling alone. It shows you what’s happening to the price of metal overall – rather like you might track the Dollar Index to see how the greenback’s doing – instead of focusing solely on one single pairing.

And it’s telling us…?

• The GGI outperformed global equities in Q1, rising 4.28% from the close of 2009. The MSCI Barra World Index (local prices) added 4.16%;
• The index has yet to fall for two consecutive quarters since the start of 2000;
• To date, the GGI shows the world’s money en masse shedding very nearly three-quarters of its value in gold since the start of 2000.

Our guess here at BullionVault is that this loss of purchasing power in cash and bank-savings worldwide would require strong, positive real rates of interest – after inflation – to reverse it.

Our second guess? There’s fat chance of that worldwide anytime soon.

Looking to Buy Gold today? Make it simple, secure and cost-effective by using BullionVault…

Source:Global Gold Index – Higher Again

Gold up, Dollar down, right? Wrong…

SO THE LAST DECADE of rising Gold Prices simply mirrored the US Dollar’s steady decline. Right…? asks Adrian Ash of BullionVault.

Well, no actually. As BullionVault has repeatedly noted, and never less than when clutching a whisky and ginger this past Yuletide…typically to a fast-emptying room…the last 10 years of rising Gold Prices has been about much more than the ailing Dollar, sick as it is.

Gold’s tripling-and-more since Tues 4th Jan. 2000 in fact came against all major currencies, let alone the minor ones. Indeed, when judged against a truly globalized basket of the globe’s truly basket-case currencies – those various monies issued by the top 10 economies in terms of Dollar-GDP – the Gold Price turned decisively higher in mid-2001…looking back only a handful of times and never for more than a 20% drop.

All about the Dollar? Not on our Global Gold Index.

Yes, volatility and violence rose together as the Gold Price pushed higher. And yes, the Dollar-price gains outstripped those in the Euro (292% vs. 180%) and commodity-led Canadian Loonie (179%).

But your local fund managers, financial advisors and op-ed pundits would have been hard-put to beat those returns with anything else. And as gold remains (at least in the view of die-hard, gloating and lone-drinking "gold bugs") the only viable one-world currency, it’s worth glancing at just how it performed against the last decade’s various top 10 monies by economic weight…

* NB: The GGI is rebased for the top 10 currencies by economic output each year. The 13 gold-lagging currencies above all made one appearance (or more) in the last decade’s data. 2009 positions given here, courtesy of the IMF. The US accounts for 32%, the Eurozone 27%.

Of course, no one much cares for the last 10 years of data, however – not outside the relative performance tables of mutual fund sales teams.

But whether you think gold warned of trouble ahead when it first doubled to the start of 2006…or you feel it merely worked-as-prescribed when it almost doubled again during the financial crisis that then followed…it’s clear that the Decade of Gold just ended was a long way from a "Dollar down" story alone.

And all this without the much-fabled price inflation which newcomer pundits believe is essential for a long-term rise in the Gold Price. Just imagine what the price might do from here if a true surge in the cost of living now shows up worldwide.

Ready to Buy Gold…?

Source:Dollar Nonsense