GOLD PRICES edged back up to $1280 per ounce on Thursday in London as world stock markets rose for the first session in six.
With gold prices trading just $10 per ounce above the 13-week closing low of week-ending Friday 3 November, so-called “junk bond” prices also rallied with equities.
US corporate bonds rated below investment grade gained 0.7% from yesterday’s new 7-month low as measured by the SPDR Bloomberg Barclays High Yield Bond ETF (NYSEArca:JNK).
Wednesday night saw a new all-time record set for a work of art sold at auction, when Salvator Mundi — reputedly by 15th Century Italian Leonardo da Vinci — fetched $450m at Christie’s in New York.
The sale had been squeezed into a sale of Post-War & Contemporary Art.
“This was a thumping epic triumph of branding and desire over connoisseurship and reality,” the New York Times quotes one Manhattan art adviser.
Shares in Christies’ competitor Sotheby’s (NYSE:BID) today rose 2.9%.
BID fell almost 90% during the global financial crisis of a decade ago, having sunk previously ahead of the Tech Stock Bubble bursting in early 2000.
Sales volumes through the global fine-art market shrank by some 60% over the two years following Tokyo’s stockmarket and property crash starting in late 1989.
“Most of the world is well advanced in the economic cycle,” says a new report from French investment bank Societe Generale, warning clients that “at the same time, leverage is high, especially on non-financial corporate balance sheets.
Should the US Fed continue raising interest rates, it says, a slowdown in economic growth will “put global debt back in the spotlight and have [a] spiralling effect.
“Historically [such] periods signalled a bull run for gold and [the stockmarket volatility index] VIX in particular.”
The Dollar on Thursday held above yesterday’s 1-month lows to the Euro currency as new US data showed industrial production in the world’s largest economy rising just ahead of forecast in October.
Fresh Eurozone data showed a slight slowdown in inflation across the 19-nation currency union at 1.4% per year.
British retail sales meantime showed a smaller than expected decline last month from September’s jump, helping Sterling to rally and curbing the gold price in UK Pounds per ounce below £970, barely changed for the week so far.
“The financial markets are bulging with systemic risk,” says the latest quarterly letter from gold-mining fund manager John Hathaway to clients of Tocqueville Asset Management, pointing to “financial-asset valuations at all-time highs” while the size of US government debt now makes “exit from radical monetary policy difficult, if not impossible.”
“History teaches that resolution of [such] impasses most often results in monetary debasement,” says Hathaway.
“Gold and silver constitute a short list of non-financial assets with monetary characteristics.”
Disclaimer
This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.
