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Comex Gold Trading Resumes in New York
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(September 18, 2001) Some semblance of normality returned to the U.S. commodities markets as trading resumed in shortened sessions this week on the Comex exchange. Gold prices remain firm, and demand for physical gold strong, at slightly higher prices than before the mass murder in New York. Many things we can now assume have changed forever, the gold market included.
Amidst the events of the past week or so, we have been unable to find the time to update this commentary as we usually do. Different topics that we could explore come to mind, but it seems small-minded to focus on gold in light of the enormity of events unfolding from the first impact on the World Trade Center last Tuesday.

It has seemed to us inappropriate to go into lengthy commentary about gold in the light of these events. It goes without saying that gold is a disaster hedge, and an element that people turn to when enormous economic uncertainties appear. And the past few days have seen a scramble of new buyers into the gold market. If we had better writing talent on our staff, we could probably do a good job of writing meaningfully and delicately about gold and current events.

But we hesitate to do anything that could be seen as trivializing the enormity of what has happened, so at this time we're not going to attempt any midguided commentary about gold and disaster. Our business goes on, and suffice it to say our thoughts are with the people of New York and all those directly affected by this crime against humanity.

And indirectly, we are all going to be affected by the events of September 11th for a long, long time.

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A good friend of ours works about a half mile from the site of the World Trade Center. After the attack last Tuesday, he managed to escape Manhattan in his car, actually getting home early in the afternoon. His car was covered with dust from the blast, and he stopped at a carwash. The owner asked, "You were there?" and he answered yes. "Well, this wash is on me," the owner said.

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Still the shock of September 11th's terrorist attacks lingers. And the total resumption of business as usual will take some time. We are experiencing delays in mail, air courier, and armored transport. We ask our customers and clients to bear with us, and we hope and expect that by the end of this week registered mail and armored transport services will be back to normal.

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(September 12, 2001) The Bank of England went ahead with its scheduled auction of 20 tonnes of gold on Wednesday, September 12. The sale was 4.3 times oversubscribed, and the price $280. It was felt that postponing the sale would have destabilized the gold market, where demand for physical precious metals has skyrocketed since Tuesday’s terrorist attacks in the U.S.

Comex trading halted early on Tuesday, September 11th, as word of the devastating damage to the heart of the New York financial markets and the Pentagon became known. Comex markets continued closed on Thursday, with an announcement expected soon as to when they can re-open.

Tuesday’s morning fix in London came in a sleepy $271.40, only to spike to $287 as the first news of the terrorist attacks began to filter into the London markets. Later in the day, London bullion dealers used price spreads as high as $290 bid / $300 ask in physical gold trading as news from the U. S. became known.

In the U.S., all markets closed early on Tuesday, commodities as well as stock trading on the NYSE, American Stock Exchange, and NASDAQ.

Dealers in physical precious metals outside of New York City mostly remained open, and struggled to maintain markets in physical metals as demand surged all day Tuesday. Dealers encountered strong demand for gold on Tuesday and Wednesday, including here at Onlygold. We and the rest of the world did business in the old “seat of your pants” manner, without the guidance and liquidity of the Comex market of New York.

The thousands of deaths on September 11th are tragic events, evil on a scale beyond our imagining. Furthermore, the lives lost include some of this country’s and the world’s brightest and most able financial minds, whose loss to our economy is immeasurable.

Volatility will no doubt rule gold trading for some time to come. And there can be no doubt that the ramifications of Tuesday’s events on the financial markets and the world economy itself will take months and even years to unfold.

 

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