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Gold New Record High In Euros (€1,375/oz) On Greek Default And Eurozone Contagion Risk

Tyler Durden's picture




 

From GoldCore

Gold New Record High in Euros (€1,375/oz) on Greek Default and Eurozone Contagion Risk

Gold is marginally lower in most currencies and is trading at USD 1,836.60, EUR 1,350.90, GBP 1,158.90, JPY 141,320, AUD 1,779 and CHF 1,626 per ounce. Gold reached a new record nominal highs in Australian dollars, Swiss francs and euros this morning. 

Gold’s London AM fix this morning was USD 1,843.00, EUR 1,354.94, and GBP 1,164.10 per ounce.  Friday’s AM fix was USD 1,879.50, EUR 1,359.39, and GBP 1,177.12 per ounce.


Cross Currency Table 

There has been a sharp increase in risk aversion with the euro and stocks internationally falling sharply due to concerns about the coming Greek default and the real risk of contagion in the Eurozone.

The euro got off to a rocky start in Asia, falling to fresh six-month lows against the dollar and a 10 year low on the yen as downside momentum picked up after several key technical levels gave way recently.

Gold could see weakness today due to dollar strength and the possibility of margin calls for leveraged players on the COMEX. 

However, bargain hunting bullion buyers are present at these price levels and gold is likely to be supported above $1,800/oz.

While dollar strength would normally result in gold weakness it is very possible that both the dollar and gold could rise together in the short term. This would result in gold making sharper gains in pounds, Swiss francs, euros and other fiat currencies.

France’s largest banks by market value, BNP Paribas SA, Societe Generale SA and Credit Agricole SA, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings.

Officials in Merkel’s government are debating how to shore up German banks in the event that Greece defaults. Merkel is due to hold talks on the debt crisis with European Commission President Jose Manuel Barroso today.

The risk of contagion in the Eurozone sovereign, banking and entire financial system is very real and will result in continuing safe haven demand.


Gold in Euros – 30 Day (Tick)

Gold is being supported by broad based global gold demand. Demand dropped in the second quarter of this year compared with the second quarter of 2010, but is expected to strengthen by the end of 2011, driven by robust store of wealth jewellery buying in India and China and recovery in global investment demand, the World Gold Council said over the weekend. 

The real risk of a U.S. and wider global recession is prompting investors to buy gold as safe haven while Asian consumers continue to buy jewellery and increasingly gold bars as a store of value and inflation hedge.

SILVER
Gold’s unloved little brother silver continues to receive little or no media coverage which continues to be bullish from a contrarian perspective. 


Silver Bullion in USD – 1 Year (Daily)

Silver has been quietly consolidating for the last two months between $37/oz and $44/oz. A close above $44.25/oz could see silver quickly challenge the recent and 1980 record high at the $50/oz level. 

Longer term the real high (CPI inflation adjusted) of $130/oz remains a realistic price target.

Silver at just under $42 per ounce continues to be more attractive to many investors relative to gold at about $1,850.

At 44:1 the gold silver ratio continues to favour silver with many silver buyers conscious of the long term historical gold to silver ratio of 15 to1.

Silver is also more attractive to many jewellery manufacturers and jewellers whose margins on gold jewelry are being badly squeezed.

Jewellery makers at an international trade fair in London have said that silver is seeing greater use in jewellery as rising gold prices put off cash strapped consumers.

High prices have practically squeezed gold out of the low and medium-priced segments of western jewellery markets, with other metals replacing gold for small gifts worth 100-300 euros, industry officials said.

David Lamb, managing director for jewellery at the World Gold Council (WGC) said that "at the current prices of gold, that level of jewellery in gold has really disappeared." 

For the latest news and commentary on financial markets and gold please follow us on Twitter.

SILVER 
Silver is trading at $40.85/oz, €29.99/oz and £25.76/oz. 

PLATINUM GROUP METALS 
Platinum is trading at $1,806.00/oz, palladium at $721/oz and rhodium at $1,750/oz. 

NEWS
(Bloomberg)
Gold Advances as Europe's Escalating Debt Contagion Boosts Haven Demand

(Reuters)
Germany studies potential impact of Greek default

(Spiegel Online)
German Finance Minister Prepares for Possible Greek Bankruptcy

(Bloomberg)  
Gold Bets Help Hedge Funds Weather August Global Market Rout

COMMENTARY
(The Telegraph)
Ambrose Evans-Pritchard: Germany and Greece Flirt with Mutual Assured Destruction‎

(Zero Hedge)
Things That Make You Go Hmmm - Such As The Keystone Cops At The Helm Of The Eurozone

(King World News)
Jim Rickards - Gold Rise to Continue on Fed Manipulation

(Across the Street)
September 11 – Ten Years Later

(Wall Street Journal)
Banks Raise the Standard for Gold

(Investment News)
Marc Faber's golden rule: Buy a 'little bit' every month

 

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Mon, 09/12/2011 - 07:29 | 1658861 maxmad
maxmad's picture

But wait what happened to this global intervention?  Doesn't look like China showed up for the Intervention... 

Mon, 09/12/2011 - 07:32 | 1658868 Debugas
Debugas's picture

actually USA bashing Europe is very good for German exporters

Mon, 09/12/2011 - 07:36 | 1658878 Oh regional Indian
Oh regional Indian's picture

Hmmmmmm....feels very de-flationary all around. All commodities, stox, bunds, everythign is takign a hammering. The Indian market went whump onit's ass today. Worst IIP numbers in years.

The un-wind. The Snap-back. What?

V

The Source of America's Power

Mon, 09/12/2011 - 08:03 | 1658992 AUD
AUD's picture

The un-wind. The Snap-back. What?

Nope, its the speculation. Stocks are down because the speculators are angling for some of that central bank 'big easy'. I mean bidding up bond prices, the corollary to falling yields.

There is no anchor to bond prices, so no ceiling on bond prices. Yields can & will go to zero, or somewhere close to it at the long end.

Mon, 09/12/2011 - 07:51 | 1658880 Minoan
Minoan's picture

What about nickel and brass?

Greece issues 1 million 2 euro commemorative coins for 10 years of eurozone.

The cost will be 400,000 euros.

www.enet.gr/?i=issue.el.home&date=12/09/2011&id=308903 (for Greek readers)

 

Mon, 09/12/2011 - 07:39 | 1658883 Léonard
Léonard's picture

Everybody knows a Greek default will not mean the end of the Euro. Once Greece defaults, the Euro will become a strong and sound currency (according to Jim Rogers himself).

And if it does not, the Euro is based on real industries and infrastructures and can also be backed by gold one day (Europe has gold), unlike the dollar.

Mon, 09/12/2011 - 07:47 | 1658929 maxmad
maxmad's picture

You must be new here.... Once Greece goes, the Euro goes everyone knows that..... Germany has their Duetsch Marks all set to go..

Mon, 09/12/2011 - 09:50 | 1659311 Spitzer
Spitzer's picture

Give me one example in history where a bankruptcy made a currency literally disappear off the face of the earth. Bankruptcy is the very refusal to print.

Quit getting so emotional and think this through. Greek default is short term bearish for the Euro but hugely long term bullish.

Mon, 09/12/2011 - 08:29 | 1659060 JOYFUL
JOYFUL's picture

Everybody knows a Greek default will not mean the end of the Euro.

Just how small is your circle of contacts squire....anybody outside your bathroom mirror?!?!?

And if it does not, the Euro is based on real industries and infrastructures and can also be backed by gold one day (Europe has gold), unlike the dollar.

You're jokin us right, just like that million$bonus dude!?!?...

real industries...>wtf>....couple of pieces of tangible goods I acquired in the last year....{made}by respected German names...subsequent discovery of the small print on same shows that said items are "designed/and or quality inspected in" Germany....product of PRC....

about that gold thing....exactly where did you say that gold is held at this moment?!?!?

you must be jokin us....right!?!?

 

hahaha OK?

Mon, 09/12/2011 - 09:54 | 1659320 Spitzer
Spitzer's picture

Listen you clueless moron.

Bankruptcy in Greece is a result of the ECBs refusal to print. Sure there will be some capital flight out of the Euro(funny how its still worth more then the dollar with Greek bonds at 50 to 100% yields) but that does not mean the Euro just falls off the face of the Earth.

Are you bullish on the dollar because there will be no refusal to print ?

Mon, 09/12/2011 - 07:38 | 1658887 cabtrom
cabtrom's picture

Yea whatever, the sky has been falling for 80 years, nothing changes. I'm holding cash, it's the best thing for bribes.

Mon, 09/12/2011 - 07:41 | 1658900 Sudden Debt
Sudden Debt's picture

I thought a gun or a knife where the best thing for bribes?...

Mon, 09/12/2011 - 07:39 | 1658892 Peter Pan
Peter Pan's picture

Despite the Chinese knowing about western gold manipulation, you can be sure that even they are contributing to its supression at this juncture, for the simple reason that a gold break out would severely undermine the whole financial fabric which is already half torn. The Chinese want America and the west weakened, but not broken as it could probably trigger an implosion, explosion or revolution back home as well.

 

Mon, 09/12/2011 - 07:40 | 1658894 Smiddywesson
Smiddywesson's picture

While dollar strength would normally result in gold weakness it is very possible that both the dollar and gold could rise together in the short term. This would result in gold making sharper gains in pounds, Swiss francs, euros and other fiat currencies.

Dollar continues to rise and gold falls, no margin hikes

Gold rises with the dollar, margin hikes

Gold explodes on EU problems, margin hikes

Two out of three scenarios call for margin hikes.  They are not going to give up the $2000 level without a fight.

Mon, 09/12/2011 - 09:57 | 1659336 Spitzer
Spitzer's picture

Sure looks like this 1 or 2 day dollar rise has everyone on the king dollar bandwagon.

Fundamentals be dammed.

Mon, 09/12/2011 - 07:40 | 1658896 Sudden Debt
Sudden Debt's picture

Does anybody notice Silver almost always tracks the euro?

 

Mon, 09/12/2011 - 07:45 | 1658915 sunnydays
sunnydays's picture

The Swiss Franc has dropped big time.  If I was Swiss I would be one upset person with what the government there has done to the currency.  French banks down 14%.  Looks like a killer week. 

Mon, 09/12/2011 - 07:48 | 1658931 Smiddywesson
Smiddywesson's picture

Yes but a lot of people with mortgages denominated in francs are very relieved.  The lesson was that no country is going to sit out the race to the bottom, not even Germany.

Mon, 09/12/2011 - 07:53 | 1658955 Mitch Comestein
Mitch Comestein's picture

15 to 1 historic ratio???  When Nero was emperor this was probably true.  However, post Comstock Lode, 15 to 1 has lasted about a day when it hits.  That is not the historic ratio, that is a TOP.

In 1980, didn't 16 to 1 last a day.  In 1873, I know it didn't last long, measured in days. 

This history is a myth.  If it hits 15 to 1, sell it all including your tooth fillings.

Mon, 09/12/2011 - 07:55 | 1658960 PaperWillBurn
PaperWillBurn's picture

FOFOA is out with another piece

http://fofoa.blogspot.com/2011/09/once-upon-time.html

 

Should be a ZeroHedge Must read

Mon, 09/12/2011 - 09:03 | 1659147 Sean7k
Sean7k's picture

An excellent read. Thanks!

Mon, 09/12/2011 - 08:22 | 1659024 Clint Liquor
Clint Liquor's picture

The Empire strikes back........................

France to ban cash sales of Gold and Silver:

http://www.egaliteetreconciliation.fr/Achat-d-or-et-d-argent-en-liquide-...

 Edit: The article was in English when I linked it. I don't know how to fix it. It says:

"From 1 September 2011, all purchases of metals will no longer be made ??in cash. Designed to fight against trafficking of metal ...''''and scheduled for June 2012, its implementation was rushed.  Initially there was talk of applying a law against trafficking of metal (rail railway, power cable etc ...).

Can be made in cash payment of a debt greater than an amount fixed by decree, taking into account the place of tax residence of the debtor and the professional purpose of the operation or not.  In addition a monthly fixed by decree, the payment of salaries and wages is subject to the prohibition contained in the preceding paragraph and shall be made by check or by transfer to a bank or postal account or account held by a payment institution.

 Any transaction on the retail purchase of ferrous and non ferrous is made ??by crossed check, bank or postal transfer or by credit card, not the total amount of the transaction may not exceed a ceiling set by decree.  Failure to comply with this requirement is punishable by a ticket for the fifth class.

 II.-I Notwithstanding, the costs of the department conceded that exceed the sum of 450 euros must be paid by bank transfer.

III.-The preceding provisions shall not apply:

a) For payments made by persons who are incapable of binding themselves by a check or other payment, as well as those who have no deposit account;

b) For payments made between individuals not acting for business purposes;

 c) paying the expenses of the state and other public figures.

Mon, 09/12/2011 - 08:27 | 1659056 Minoan
Minoan's picture

This will increase "trafficking".

Mon, 09/12/2011 - 08:55 | 1659124 JOYFUL
JOYFUL's picture

"punishable by a ticket for the fifth class"

perhaps your sources at google translate or whoever can give us an insight into what exactly that entails....Buchenwald re-enactment?  Journey to the center of the Earth?  Full year of Amtrak super savings?

Do we need to check our teeth for gold fillings now before a jaunt to Paris?

Mon, 09/12/2011 - 08:28 | 1659057 thunderchief
thunderchief's picture

They want everyone to run to King Dollar in this market madness.  Run to King Dollar as even gold and silver is not safe.  Save yourselves by being the first to jump.  All at once lemmings, run to King Dollar.

Mon, 09/12/2011 - 10:07 | 1659381 Spitzer
Spitzer's picture

A 2 day dollar rally sure brings out the fiat bugs. Is this dollar rally going to last as long as the 2008 one ? 5 or 6 months ?

 

Mon, 09/12/2011 - 08:49 | 1659106 JOYFUL
JOYFUL's picture

Tyler, while I admit to enjoying watching you beard the lion(s), the majority of us here are Joe Palookas just trying to preserve our meager savings and keep our heads above the (increasingly foul) waters....you got heft now brother...internationally speaking...Euro gold gets slammed hard when you talk like this...I'm personally all in from last week's buying opportunity - and would like to see a little momentum northwards now. Down almost thirty points from your elucidated high...why not walk softly and let Reggie carry the big stick?!?

After all, no one does Euro-batter better than the Middleton Man... Lick em for six Reggie!

Mon, 09/12/2011 - 08:56 | 1659126 Bokkenrijder
Bokkenrijder's picture

€1375 per Oz? Where? When? Am I blind?

The highest I see is €1360 this morning.

Mon, 09/12/2011 - 08:58 | 1659133 Bansters-in-my-...
Bansters-in-my- feces's picture

I see the Fucking-Pig-Dog-MANIPULATORS" were at it overnight.

Fuck off and die PPT Members/

You sachs of shit.

Tue, 09/13/2011 - 22:04 | 1666011 moxia19
moxia19's picture

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