Gold Rises To Unprecedented Values
Silver rose, in turn, to $ 20.99 per ounce, closing in thus to the absolute figures of the 1980s, when it progressed to $ 21.35 per ounce. The Swiss franc appreciated against the European currency, to 1.30 euros, prompting companies to salary pay measures to protect competitiveness.
Attending the World Economic Forum in Davos, at the end of January 2010, George Soros warned that investing in the yellow metal involves serious risks. Interesting enough, at that time, the great financier possessed strong bonds in the world’s first gold fund, SPDR Gold Trust, and also owned a respectable number of shares in a Canadian gold mine. Starting with January 1st, gold has won 16.21% and in just a week, it leapt by 2.61%.
In the last 12 months, gold’s progress was of 26.48%. Prior to stabilizing on Friday at the London Metal Exchange (LME) at $ 1279.40 per ounce, the yellow metal jumped to $ 1283.03 per ounce; last week’s record, marked by an fulminating and surprising evolution. Except for the U.S. dollar depreciation, there weren’t any other negative news that could have justified this ascent, which has led all the precious metals to also gain in value. Thus, the silver, which profited off the demand in the industry sector, which provides more than half of global needs, ended with the reference range of $ 20.90 per ounce, its highest level since March 2008. If it will go up the bar of $ 21.35 per ounce, the gray metal will return to the absolute figures of the 1980s. On the other side there are the platinum metals. On Wednesday, palladium reached $ 563 per ounce, the best performance in the last four months, while platinum rose Friday to $ 1.631 per ounce, its price in mid-May.
Influence on oil markets
If the president and founder of Soros Fund Management considers the investment in gold to be a dangerous business, because “prices will increase further, but this cannot continue forever,” the American professor Nouriel Roubini has identified two main causes of the increased price of the yellow metal. “There are two events which cause price increases. First, it is inflation, absent practically in developed economies, and secondly, the risk of collapse of the global financial system, risk that has lowered with the help of implementation of support programs, “said the renowned analyst.
If gold rises, oil falls. After four cheaper consecutive sessions, the “black gold” ended last week below $ 74 per barrel in the New York Stock Exchange, amid a market concerned about the decline in U.S. consumer confidence. Thus, while a North Sea Brent barrel with delivery date in November, which on Wednesday evening became the new reference point, was quoted at $ 77.44 per barrel, a kickback of $ 1.04 against the value in the eve, a “light sweet crude” (WTI) oil barrel lost $ 1.27, to arrive and stabilize at $ 73.30. Avoiding long-term forecasts, analysts have estimated, however, that the decrease in crude oil is only temporary, the market should follow an ascending trend after the passage of Hurricane Karl, which led the Mexican company Pemex to suspend oil production on 14 small-ranged platforms and after the reopening of the Canadian oil-pipeline that supplies several U.S. refineries.
Measures against a strong Swiss franc
Given this background, the Swiss currency, considered by Nouriel Roubini to be along with gold, the Japanese yen and the U.S. dollar one of the factors that will save the world’s economy, continued to reach new records against the European currency, making its 1.30 euros mark, an increase of nearly 10% since January 2009. This is a situation that caused panic among Swiss companies, which are based on export businesses and which see in the appreciation of the Swiss currency a threat to their competitiveness. Moreover, the USS or SGB (Union Syndicale Swiss or the Swiss Federation of Trade Unions), which regroups 16 movements, warned about a speculative over-evaluation of the franc, which leads to not quite rule-abiding practices on behalf of certain employers.
“Companies want to recuperate the losses caused by the oscillations on the stock market on account of their employees, trade unionists believe. Might this be a simple exaggeration? Maybe, but for companies in border areas it’s definitely not.
For example, Stocklin Company decided that French and German employees (120 out of 370 in total) will receive lower wages by 6%. Printing company Karl Augustine decided, in turn, to not even pay the 15 employees that came from the border areas in Swiss francs, but instead to pay their wages in euros, at a rate of 1.55 francs to one euro. In the watch industry, which has attracted many workers from neighboring regions and where a number of companies are not subject to collective labor agreements, wages fell by at least 1% this year, the most remarkable recoil in the past 15 years.11