-- Posted Wednesday, 19 May 2010 | | Source: GoldSeek.com
"London is dominating the gold market globally, with an a.m. Fix of $1,209.5. Silver is standing at $18.59 solidly"
Gold - Very Short-term
The current consolidation phase is just above $1,200 and will continue for the time being. You have to decide whether this is a buying or selling opportunity.
The $ Foreign exchange markets took the € down into the $1,21zone, now at New York’s open the € has recovered to $1.23. Smells like intervention to us, which backs up our comments below.
For the last few years the €:$ exchange rate has been a guiding light to speculators and traders on the gold price. There is no good fundamental reason why this should be so, but it has worked for them. Slowly but surely, as the crises has developed in the € this relationship has broken down and gold de-coupled from the €. But it is taking bad experience to convince speculators and traders to drop this pattern. Now like waves on the shore, the $ and gold are moving together, then the € and gold are moving together, then vice versa and so on. Expect gold to completely de-couple in the coming days and for gold to reflect what is not simply a sovereign debt crisis but a global monetary crisis.
The market’s mood is not one of recovery, but, what’s next?
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Silver – Very Short-term
Silver is in a battle royal as it consolidates around $18.5, but like gold it’s holding today. Silver is a carriage on gold’s train for now, with fundamentals put to one side. Repeat: - It will continue to rise faster and fall further than gold, going forward. [Subscribe through www.SilverForecaster.com].
Gold Price Drivers
We said before that if intervention in the currency markets did not work then regulation would come into play. The sad fact is that when this happens it is a signal to the market that the nations defending have run out of alternatives. The banning of naked short selling of European government 
bonds with credit-default swaps in Germany is not only that, but somewhat fatuous, because those short sellers can do it in any other country in the world and still short the €. If they ‘regulate’ German banks, that will leave all the other banks as well as non-bank speculators. Expect more governmental regulatory action. It’s like putting a non-waterproof band-aid on the Titanic’s holes. Contagion will spread to all [including the U.S.] high deficit country’s currency in the next few months. Politicians versus money, who will win?
And don’t mistake China’s renewal of Treasury buying as an act of faith in the $. It is the lesser of two evils as they unload Euros and their bonds too. Where else can they go? All of the above confirms gold is a better place to be! Watch for the Persian Gulf and China’s next moves on new international currencies soon!
Regards,
Julian D.W. Phillips – www.GoldForecaster.com
-- Posted Wednesday, 19 May 2010 | Digg This Article
| Source: GoldSeek.com
