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Gold Jumps 2nd Day Running 3pm in London as Iran 'Seizes' US Cargo Ship, Gold/Silver Ratio Down & 'Set to Fall' Further
Tuesday, April 28, 2015 8:02
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Adrian Ash is head of research at BullionVault, the world-leading gold trading & ownership service online…
GOLD jumped at the London 3pm benchmarking formerly known as ‘the Fix’ for a second day running Tuesday afternoon as news broke of troops from Iran firing on and capturing a US cargo ship in the Strait of Hormuz.
Starting at 15:00, a surge in the average ‘spot’ quote from major bullion banks and dealers forced the LBMA Gold Price auction‘s suggested price up to $1209 per ounce – the highest London benchmark since 3rd March – before supply and demand came within the accepted 20,000 ounce imbalance.
Spot prices then raced another $4 higher to touch 3-week highs at $1213 per ounce by 15:11, at which time Arab news service Al Arabiya’s English language site reported that Iran is “holding” a US cargo ship with 34 sailors at its southern port of Bandar Abbas.
US crude oil contracts also spiked, but failed to touch mid-April’s six-month high.
Western stock markets extended an earlier fall to lose 1.8% in Europe.
Silver prices added another 1.4% to Monday afternoon’s near-4% jump, trading back above $16.60 per ounce for the first time since 10th April.
“Silver had been underperforming gold for most of April,” TheBullionDesk earlier quoted strategist Edel Tully at Swiss investment and bullion bank UBS, “with the gold:silver ratio rising from the low 70s towards the highs around 75.”
But since mid-month, the Gold/Silver ratio – a simple measure of gold’s price-per-ounce divided by silver’s, the better to view their relative strength – has “remained capped” says Tully, a fact which “is actually quite encouraging and strengthens our conviction that it will eventually outperform gold further down the road.”
The Gold/Silver Ratio in 2015 “could fall back further,” agreed a note from Lusanne’s Diapason Commodities last week, saying that “on a fundamental basis, silver may outperform gold on the acceleration of global growth [because] silver is more cyclical due to its more extensive industrial use.
“As the risk-off environment continues to fade, the underperformance of the most defensive precious metals will continue.”
Tuesday’s jump in precious metals prices – coming as news broke of Iran either “escorting”, “forcing” or “seizing” that US cargo ship – put the Gold/Silver Ratio down below 73 on spot prices,
Tehran’s Fars news agency – a quasi-government mouthpiece in Iran, according to the BBC – said the US vessel was seized for “trespassing on Iran’s territorial waters.”
Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2010
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