Gold Prices Volatile in Wake of Japan Disaster
Posted on: 16th March 2011 By Anita

As gold traders it’s been an interesting time with choppy gold prices in the past few days… Overnight there was significant liquidation of precious metals (-$US30) with traders selling anything of value in an attempt to raise some cash. Sometimes investors have little choice but to sell well preforming assets to cover margin calls and losses elsewhere.

The massive slide in the Nikkei (Tokyo Stock Exchange) has started to ease off with some thinking that the markets have been ‘oversold’ due to the severe asset sell-off around the World. Fear and confusion are great reasons to take profits while you can and sell gold before things get worse.

The other concern for gold prices is the scale of investment holdings in Japan because they own large amounts of gold (765.2 Tons/3% of total World reserves), this supply could come onto the markets in the coming weeks as physical holdings are liquidated to generate cash.

Precious metals are often seen as safe-haven assets, however jewellery because of it’s gold purity content (normally less than 98.5%), it’s unique form (non-uniform) and the retail premium (300%+) over the gold value would not be considered an asset in the common sense meaning.

A weakening New Zealand dollar is helping to cushion the effects of the price movements (so we can be grateful for that!).

If you’re thinking about selling – talk with the Gold Smart team today! 0800-465-37