Gold In Pounds Rises To New Record High After Moody’s Lists 14 UK Banks For Downgrade Review

Tyler Durden's picture

From Gold Core

Gold in Pounds Rises to New Record High over GBP 944/oz on Stagflation Risk – Moody’s Lists 14 UK Banks for Downgrade Review

Gold is marginally higher in most currencies today as the yen, the dollar and the pound are all weaker. 

Gold has reached a new record nominal high in British pounds due to the
growing risk of stagflation in the U.K. and due to Moody’s somewhat
belated threat to cut its ratings on most UK banks. This was not helped
by Chinese ratings provider Dagong Global Credit downgrading the
U.K.’s local and foreign currency sovereign credit rating from AA- to
A+ with a negative outlook.

Cross Currency Rates

The increasingly powerful Chinese credit rating agency warned that the
U.K. government's fiscal deficit is likely to be a very high 9% of GDP
this year and the U.K.'s banking system has a large amount of risk
exposure, which could create risks for the government. It estimates
that about 40% of the banking system's GBP 2 trillion worth of assets
is exposed to risk.

Gold Bullion in British Pounds – 30 Day (Tick)

It is important to remember that gold in sterling’s record today is
only a nominal high. Gold’s British pound nominal high in 1980 was at
GBP 371/oz (21 January 1980) and therefore the inflation adjusted high
is over GBP 1,200/oz.

Gold Bullion in British Pounds – 1 Year (Daily)

Gold has had a period of correction and consolidation in sterling
(see chart) and indeed in all currencies in recent months. Even with
gold at record sterling highs at GBP 942/oz and after the recent
gradual gains, gold is only some 14% higher than 12 months ago and only
some 3% above the record nominal highs (GBP 914.77/oz ) seen at the
end of December 2010 – nearly 5 months ago.

Such gradual gains are hardly indicative of “irrational exuberance”, an investment mania or a speculative bubble.

The backdrop of strong physical demand internationally and
especially in Asia, points to a weak and very fragile UK economy and
British bonds and a British pound that are vulnerable to depreciation.

UK investors and savers, like their counterparts internationally,
would be wise to diversify into international equities, international
bonds (high credit; short dated) and gold in order to protect against
stagflation and the continuing debasement of their currency. 



Gold is trading at $1,521.60/oz, €1,079.99/oz and £942.98oz.


Silver is trading at $35.68/oz, €25.32/oz and £22.11/oz.

Platinum Group Metals

Platinum is trading at $1,757.25oz, palladium at $734/oz and rhodium at $1875/oz.


(MarketWatch) -- Gold, silver move higher; dollar weakens

(Reuters) -- Euro-priced gold strikes record on debt worries

(Financial Times) -- Euro-priced gold jumps to record high

(FastMarkets) -- BULLION MORNING - Gold falls fractionally, safe-haven interest battles dollar ascent


(Financial Times) -- Keynesians are complacent about the dollar

(Wall Street Journal) -- Mundell - 'Father of Euro': Deflation Risk for the Dollar

(Financial Times) -- Small gains give succour to gold bugs

(Mineweb) -- Hate paper money, love gold. Gold and silver turning up - Puru Saxena

(Financial Times) -- Silver and short covering – a theory

(MoneyWeek) -- How Spain could rip the eurozone apart

(ZeroHedge) -- David Stockman: "Both Parties And The White House Are Advocating A US Default" 

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Crisismode's picture

Does Dagong rate PRC debt AAAAAAAAAAAA++++++++++++++++?

oh_bama's picture

Always going to be new record if you value gold in weakest currency units.

In a few days oil will be all time high in Belarus currency but so what??

Is it News? Entertainment? Opinions or just repeatitive information?

(Same as employment and claims always revised upword, but that is another discussion)



writingsonthewall's picture

Horse, door, barn, bolted.

Bubbles the cat's picture
Bubbles the cat (not verified) writingsonthewall May 24, 2011 9:32 AM

I see it more like this:

our financial geniuses put the contents of the barn on the horses then bolted out the door

hugovanderbubble's picture

Ratio will be :

Gold onze  equals 8 times Silver onze.

KlausK's picture

Would be too good to be true.

Libertarian777's picture

I think its more 1oz gold = 15 trolls

overmedicatedundersexed's picture

Icelandic irruption high for PM's coming down the track..things have gone dead calm as we head into the mega tornado at rapture gulch..BTFD.

Nations sitting on the edge slowly tipping into default.

Fat Ass's picture

Yawn -- gold's previous GBP "all time high" was a whole three months ago.

An interesting one is the AUD - the AUD has been absurdly high (viz a viz other national paper), so gold is relatively not doing well in AUD - it's finding it hard to reach a new AUD high.

trav7777's picture

who gives a fuck what Dagong says; they have no power

tmosley's picture

Except among the Chinese, who happen to hold quite a bit of our debt.

Bubbles the cat's picture
Bubbles the cat (not verified) tmosley May 24, 2011 9:31 AM

Ah....yes....there is that...err...minor detail.

tallen's picture

I miss the whole A= Good B=ok C=not good D = crap.

Not this whole AAAAA++ garbage, so that moody's can get massive fees.


AladdinSaneGirl's picture

Exactly: no schoolteacher would use a scale that differentiated between AA- and A+. LOL.