goldsilverworlds.com / By David Levenstein / March 13, 2013
Gold prices seem to have stabilized for now, after a tumultuous two weeks, when the price of the yellow metal was driven down by speculators on Comex who reacted to the slightest bit of economic news.
Prices tumbled after the US Federal Reserve’s Federal Open Market Committee released their minutes from its latest meeting at the end of January. The sell-off was prompted by a few words in the minutes that hinted that the Fed could possibly end its quantitative easing programmes sooner than expected. Then, a week later, the price of gold rebounded strongly when US Federal Reserve chairman Ben Bernanke reaffirmed his support of the Fed’s monetary stimulus policies. Speaking before a congressional committee, Bernanke defended the Fed’s policy of buying bonds to keep interest rates low in order to promote growth and bring down the unemployment rate. His statement seemed to ignite all the markets and sent gold back above the $1600 an ounce level.
The price of gold fell 5% in February which can be attributed to the aggressive selling of paper gold on the COMEX. But, it is important to note that while gold fell in dollar terms, it remained quiet resilient in other fiat currencies. In euros and pounds, gold only fell by 1.1% and 0.7% respectively. For the month, gold fell just over £8 from £1,049/oz. to £1,041/oz. and from €1,225/oz. to €1,210/oz. Perhaps even more interesting is performance of gold in Japanese yen. An ounce of gold, which sold for 125,000 yen last July, now sells for 145,000 yen. It touched 155,000, an all-time record, early in February.
In the past couple of years Japanese individuals who swapped their paper currency for gold are now definitely benefiting from their action. Gold has rocketed up 36% in yen in two years.
And, this isn’t an isolated case. In recent months, gold also hit new highs in other countries, including Brazil, Iceland and India.