fear drives gold to new record - good for nme

And yes i know it is not in $A

Fear drives gold to new record
From: Dow Jones Newswires August 20, 2011 8:09AM

GOLD catapulted to another record as fears about the US economy and concerns about Europe's banks added to bullish sentiment that gold is set to reach $US2000 a troy ounce.
The most actively traded contract, for December delivery, settled $US30.20, or 1.7 per cent, higher at a record $US1852.20 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the contract's ninth record settlement this month.

Thinly traded August-delivery gold rose $US30.00, or 1.7 per cent, to settle at a record $US1,48.90 a troy ounce.

Gold has stood out as the one asset likely to withstand a deteriorating global economic environment, with investors flocking to buy the yellow metal through futures, physical-gold exchange-traded funds and purchases of physical gold in the form of coins and jewelry.

"At the end of the day you have to find a place where your money is safe and it goes back to the ultimate currency, the ultimate safe haven, and that's gold," said Graham Leighton, director of precious metals at Newedge.

Moreover, as gold continues to rally harder some investors are entering the market in search of gains, rather than to protect against losses in other assets. Gold is trading just shy of $US1900, and many market watchers expect prices to vault past $US2000 in short order.

"I find it hard not to see $US2,000 by the end of this year," said Adam Klopfenstein, senior commodity strategist with MF Global. "Heck, I think we're going to see it by the end of this month."

But gold's success may be its undoing. As gold's gains accelerate the trading range widens and volatility rises. This makes it likelier that CME Group Inc. (CME), which owns the Nymex, will require market participants to post more collateral, known as margin, to trade futures.

"The higher margins could set up some barriers to entry to the market," as investors would have to put up more cash to trade futures, said Charles Nedoss, senior market strategist with Olympus Futures. "If we continue to trade in these ranges I wouldn't be surprised to see margins go up."

Futures margins are typically around 10 per cent of the contract value, but while gold prices are up 13.5 per cent this month, CME has raised margins just once, to around 4 per cent of the value, Nedoss added.

Interactive Brokers, an online broker, told clients Friday afternoon that both the CME and Interactive Brokers itself are likely to increase margins in the next few days.

"We have real time risk management--it's a very efficient way to safeguard the interests of customers and the company at a time of increasingly volatile trading conditions," a spokesman for Interactive Brokers told Dow Jones.

A CME spokesman told Dow Jones Newswires has not announced a margin increase on Friday, adding that the exchange typically changes margins after a market closes "in order to have a full view of that trading day's market liquidity."

Investors may be well served to look beyond gold, as other precious metals are due for a catch up, said Newedge's Leighton. As gold marches toward $US1900, it's outpaced platinum in recent weeks and left silver's gains in the dust.

"The other metals are performing well, but they're really under performing relative to gold. Eventually they have to play some kind of catch up," Leighton said.

Silver for September delivery, the most actively traded contract, gained $US1.744, or 4.3 per cent, to settle at $US42.432 a troy ounce on the Comex.

The most active Nymex Platinum futures, for October delivery, rose $US27.20, or 1.5 per cent, to settle at $US1,874.90 a troy ounce.

Palladium for September delivery, the most actively traded contract, fell $US8.20, or 1.1 per cent, to settle at $US748.80 a troy ounce.