-- Posted Wednesday, 2 June 2010 | | Source: GoldSeek.com
As the mini correction and consolidation continues gold was fixed at $1,221.00 this morning and then slipped through the day to fix in the afternoon at $1,215. It’s now trading slightly higher at $1,217.00 in New York. With the Japanese Premier resigning for not keeping election promises [That’s a first!] and tensions in the monetary part of the Eurozone rising, gold is settling into a strong place with good support.
Gold - Very Short-term
At each consolidation point, gold finds it has support and is now consolidating in an ever diminishing trading range. The present one is between $1,210 and $1,220. The € price of gold hit a new record of €1,009 today.
Another 14.4 tonnes of gold was sold in April by the I.M.F. after the sale of 18.5 tonnes in March. And yet the gold prices still rise. We believe that a large quantity of this finds its way to the central banks of Russia and China [in addition to its purchase of local production]. This is another factor confirming the presence of large institutional buyers seeking large volumes of gold at set prices. This type of buying at around these prices will continue until large volumes are no longer available.
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Silver – Very Short-term
Still moving with gold, silver slipped to $18.20. Nothing has changed in the silver or gold market from yesterday, but beneath the surface this is a calm period before the storm. It is still riveted to the gold price, so continue to expect the price pattern to mimic that of gold.
Gold Price Drivers
A completely underreported and important piece of news of late has been the People’s Bank of China’s intention to price gold in the Yuan. Not only is gold providing a valid measure of value to all currencies, but pricing gold in the Yuan is a good first step in internationalization of the Yuan. This is coming and don’t expect an appreciation of the Yuan when it does! Just digest the thought that Chinese suppliers begin pricing their goods in the Yuan and expect payment in that currency. [We discuss this more from time to time in our newsletter]. China just cannot accept the present monetary system if it is to achieve its goals. It has to step onto the reserve currency stage and relatively soon. A change is a’ coming! When it does, it will happen very quickly.
With spreads widening in the LIBOR market and swap markets is worrying for the financial system. It expresses tensions amongst banks and governments in the monetary system, so how can investors invest with confidence when they can’t?
Prudence dictates where we should invest now.
Regards,
Julian D.W. Phillips – www.GoldForecaster.com
-- Posted Wednesday, 2 June 2010 | Digg This Article
| Source: GoldSeek.com
