G20

On the agenda today of course is the Reserve Bank of Australia decision on interest rates. Everyone seems to be offering their opinion on what the bank will do, so why should we be any different.

In our opinion the RBA will cut/raise/hold (delete as appropriate) interest rates at today’s meeting.

In other words, we’ve got no idea. And neither do most of the talking-head economists you’ll watch on the news today leading up to it. But one thing is certain, they’ll turn “I don’t know” into about five minutes of dross.

And the market isn’t completely certain either…

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London Gold Market Report
from Adrian Ash
05:45 EST, Tues 7 April

THE PRICE OF GOLD bounced overnight Tuesday in Asia, regaining two-thirds of yesterday’s sharp losses against everything except the US Dollar, which rallied hard from one-month lows on the currency market.

World equities added to yesterday’s losses on Wall Street, dropping back below 4,000 on the FTSE100 here in London.

US government bond prices rose, pushing yields lower, while the Treasury prepared this week’s auction of $59 billion in new debt.

Crude oil slipped for the third session running, falling towards $50 per barrel.

“India has been a notable gold buyer in recent days,” reports Mitsui here in London today after the Gold Price lost 6% of its Rupee price in 3 trading days.

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London Gold Market Report
from Adrian Ash
08:35 EST, Thurs 2 April

THE PRICE OF physical gold fell against all major currencies early Thursday, dropping 2% versus the Dollar as global stock markets jumped and Treasury bonds were sold lower.

Crude oil bounced hard, back above $50 per barrel, as base metals and foodstuffs crept higher.

Ahead of today’s G20 communiqué on global stimulus spending and finance regulation from the world leaders meeting in London, the US Dollar fell together with Gold Bullion, spiking to a one-week low vs. the Euro after Eurozone interest rates were cut by less than analysts forecast.

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There is something suspicious about changing the rules after the game has already started. We’re not saying that you shouldn’t be flexible. If something isn’t working as you thought it would, then why not move in a different direction?

It makes sense.

But it only makes sense if the change is happening for the right reasons. If you’re making a change to cover up for a previous stuff-up then odds are it will back fire. Two wrongs most definitely do not make a right.

I refer of course to the two major developments from overnight: the suspension of mark-to-market accountancy rules, and the proposal for the International Monetary Fund (IMF) to sell off a bunch of gold.

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