-- Posted Tuesday, 11 May 2010 | | Source: GoldSeek.com
"Markets worldwide rose in hope yesterday, but cold reality dampened the joy as the words ‘stop spending’ & ‘repayment’ soured the future.
Gold did not share the joy, as it could have fallen to $1,080 if convinced by the rescue plan, but fell only to $1,090 before rising again. The € stalled at $1.30 then fall back to $1.268 at the opening of London. The markets are saying, “Sovereign Debt problems are structural!”
Gold - Very Short-term
During New York’s day the gold price regained its strength, firmed some more, then rose to close over $1,200. This morning Asia took the reins and took the gold price back to $1,208 with London 
coming in to take it over $1,210. The market has clearly shrugged off the ‘rescue’ and remains volatile and uncertain of the Eurozone. With Moody’s now talking a further downgrading of Greece’s and other southern Eurozone nations debt, world markets do not believe that throwing money at the crisis will make it go away. Until more is done to the very structure of the system, the monetary system of the developed world faces immediate, real and visible dangers!
Monetary stability may be held together by Eurozone central banks buying debt, [to fill the holes left by deflation and falling markets] but this is desperation, not a solution.
[More, at length, on this, in the Gold Forecaster]
Gold Price Drivers
Investment demand for gold is not simply done because the gold price is expected to rise. In these times gold becomes a place where you can hold onto your wealth. But when structures falter, it becomes a more permanent feature in portfolios? Now add to that the current state of the world equity markets:
- Levels of volatility are so high they scare the living daylights out of professionals.
- The markets are telling us that the world is coming under financial siege.
- Politicians are working with central bankers as problem solvers, who just don’t seem to want to get past the urgent to the important.
- Politicians get kudos by ‘rescuing’ us from crises. This last week they tackled the present but not the future.
So, it’s not about gold! It’s about a breakdown in confidence in the monetary system. We expand on this in our newsletter, so subscribers can get a real feel for the situation and act wisely.
With nearly another 10 tonnes of gold bought by the SPDR gold Exchange Traded Fund in the U.S. yesterday, long-term investors are diversifying their portfolios. How far can this go? Well in the U.S. Fund managers are estimated to hold $18.4 trillion worth of investments, so $56 billion worth of gold held in the fund leaves a big space for new institutional investments in gold.
Regards,
Julian D.W. Phillips – www.GoldForecaster.com
-- Posted Tuesday, 11 May 2010 | Digg This Article
| Source: GoldSeek.com
