by Kris Sayce on December 18, 2008
What a hullaballoo. Poor old Commonwealth Bank [ASX: CBA] has dragged itself through the mud in the last 24 hours.
It is supposedly the safest and most conservative bank in Australia, thanks to the millions of ‘Dollarmite’ and pensioners passbook accounts. You only have to look at the recent stats on the inflow of funds into retail banks to see that CBA grabbed the lions share.
As you will have read in the press, the CBA was using broking firm Merrill Lynch (now owned by Bank of America) to stiff retail investors by offering to sell shares at a discount to the prevailing market price.
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by Gabriel Andre on November 27, 2008
You probably know that silver prices usually track and follow gold prices but often amplify them during declines.
Silver is both a precious metal used as a value reserve, but it’s also an industrial metal well known for its physical qualities, and used in numerous technical applications. Those two features make silver very attractive not only for industrial players but also for financial investors.
Silver prices are therefore driven by real factors like mining extractions or industrial demand, but also by speculation and other financial factors. Some of them become more significant over the time, depending on the economic and financial context. It appears that the leading factor recently has been the financial deleveraging. Indeed, the massive liquidations of positions from hedge funds which chase cash to face redemptions and therefore reduce drastically their risk exposure have been the key factor of the recent sell-off.
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by Gabriel Andre on November 25, 2008
Gold is bouncing back. According to the World Gold Council, which has released its last statistics recently, the demand has surged on the third quarter: from the jewellery industry first, but also from investors through certificates and ETF’s.
The physical demand has surged in Europe and in the US, but despite those flows prices remained between $700 and $800 an ounce on the market during the last month. After several months of correction and sharp countertrends, the last 4/5 weeks have been a consolidation phase.
Despite the turmoil on the finance sector and the banking crisis, the equity markets’ plunge and the growing global recession, gold prices did not soar as it could have been expected. Indeed, the deleveraging of the hedge funds that have been facing large redemptions has capped prices on the upside.
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by Gabriel Andre on October 22, 2008
The gold market is dual: there is the physical market and the financial (paper, futures) market. The spread between those 2 markets is currently widening. Indeed, on one hand the demand of physical gold is growing everywhere in the world in the current context of economic and financial crises. The holders of physical gold don’t sell anymore as they expect a future rise in the prices.
On the other hand, the financial market is impacted by the deleveraging done by the hedge funds that are obliged to sell to cope with their redemptions.
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by Gabriel Andre on September 18, 2008
Sino Gold Limited (ASX:SGX) is an Australian company involved in the exploration, development and production of gold exclusively in China. The company is primarily focused on the development of the Jinfeng Project.
As many other commodities-related stocks, SGX has suffered from the broad decline of the tangible assets those past two months. But it had also declined between March and May, while the equity markets were sharply rebounding. The fact is that Gold prices was effectively retracing from the peak posted above 1,000$ an ounce. As a result, there is a strong positive correlation between gold prices and the SGX price development. The chart shows the SGX price action (in black) and the Gold price action (in red).
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