Bridgewater's Hennecke Comments on Gold, U.S. Bond Market
2005-12-16 00:09 (New York)
By Paul Gordon and Meggan Richard
Dec. 16 (Bloomberg) -- Martin Hennecke, a senior manager at independent investment adviser Bridgewater Ltd. in Hong Kong, comments on gold prices, silver demand, and the U.S. bond market. Gold dropped below $500 an ounce in Asia, pacing a decline on the Tokyo Commodity Exchange after the bourse raised the cost of trading bullion to curb speculative buying.
Gold for immediate delivery fell to $495.05 an ounce, its first dip below $500 since Dec. 1.
Silver for immediate delivery declined for a fourth day in five, to $8.48 an ounce as of 1:40 p.m. in Tokyo.
``The immediate reason why we had the drop is the market had crossed $540 in Japan. The Japanese government increased the margin requirements for trading there, that took a little bit of the momentum off in gold.
``In the short-term, always many, many things can happen. There are a lot of banks who are also on the short side. Often even central banks are leasing a lot of gold. They've been trying to put a bit of a lid on gold prices for a long time.
``For the medium- to the long-term, precious metals are the one asset class with the most striking potential of all.''
``Silver is almost all used for manufacturing. This rise in demand over the last 15 years, demand for silver has almost doubled for the industrial side. With gold, you'd be surprised how much there's continued demand from the industrial side.''
``There will be a huge move probably out of the U.S. bond market into gold and precious metals because the deficits in the U.S. have become totally unsustainable. The U.S. government can hardly serve even the interest on their government bonds, only new money coming in that can serve the interest for existing bondholders out of tax income.''
--With reporting by Leslie Tan in Singapore. Editor: White.