Gold will be top of investors' minds for another eight months - Jeff Christian, CPM Group
In an interview on SAfm @ 18:25 on 17 September 2008
[miningmx.com] -- THE financial turmoil which is driving investors into gold is likely to be around for another six or eight months, said Jeff Christian, managing director of the CPM Group.
"We saw on Monday and Tuesday some of that liquidity rush, in the rush to cash, the rush to convert you money into US dollars, and buy US Treasury-guaranteed investments with it. And that pushed gold and silver down. I think what you're seeing now is that that liquidity rush is over," Christian said on the SAfm Market Update.
Gold for December delivery rose as much as $90.40, or 11.6%, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping $70 to settle at $850.50 in the regular session. That was the biggest one-day price jump ever; gold's previous single-day record was a $64 gain on January 29 1980, Associated Press reported.
The huge rally came after the government moved overnight to rescue troubled insurer American International Group with an $85m bailout loan. The Federal Reserve stepped in after AIG, teetering on collapse from losses tied to the subprime crisis and the credit crisis, failed to find adequate capital in the private sector. The emergency measure came a day after Lehman Brothers Holdings, a 158-year-old investment bank, filed for bankruptcy after failing to find a buyer, the newswire said.
Fearing more tightening of credit markets, investors reacted swiftly and began dumping stocks and socking money into gold, silver and other safe-haven commodities. Gold is especially attractive during times of crisis because the metal is known for holding its value, it said.
"Meanwhile you have this tremendous demand for gold and silver in physical form around the world. People are paying record high premiums for gold and silver; in India there are reports of tightness in an investment for silver and gold by North America and Europe," Christian said.
"So I think what you are seeing - the paper market can swamp the physical market for a time, but the physical market ultimately trumps the paper market - and that's what you are seeing," he said.
"We are having troubles at CPM Group coming up with scenarios in which the gold price falls in the next several quarters significantly, and in which the gold bull market ends," he said.
"Things are very bad, we are not out of the woods. I think that we are - Churchill's famous statement - at the end of the beginning of the financial market unrest, and I think there's a lot more to come, and a lot more will come that is going to keep gold in the hearts and minds of investors for at least another six or eight months," he said. miningmx.com |
