-- Posted Wednesday, 9 June 2010 | | Source: GoldSeek.com
"Yesterday saw heavy big fund buying as we saw at the afternoon gold Fix. It followed through thereafter. This sends a strong message out to gold investors. The a.m. Fix was at $1,248 and the p.m. Fix at $1,246. In thin trading the gold price eased to $1,233 ahead of London, but then it began to rise again. The morning Fix was at $1,235 where it is trading at the moment. Silver is holding ground nervously at $18.30 waiting for the lead from gold.”
Gold - Very Short-term
The large buyers are not chasing prices. They stand back at the first sign of market froth. Gold ETF funds bought heavily again yesterday, so the large buyers stood back to let it dissipate. As we said yesterday, “There is no reason, fundamental or technical to conclude otherwise than a continuation of yesterday’s performance in gold.” This will follow the usual wave patterns. The market needs a bit of a breather now, to gather itself for the next moves, so we expect a quieter day today.
The ‘big picture’ is driving prices now. Never has the need to understand the new gold market factors been as important as now.
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Silver – Very Short-term
Silver is following gold nervously and can jump a few percentage points either way, in a heartbeat. Markets are always mercurial when they reach new highs as gold has. However, silver has yet to reach its recent peak, so there is still a measure of the ‘shunt-effect’ against gold still to come. We will see this if and when gold rises.
Gold Price Drivers
As investors flock to low yielding U.S. Treasuries and away from €-bonds conditions point to a run to the lesser of two evils, U.S. Treasuries and the $. The U.S. has a worse budget deficit than the Eurozone, so the U.S. should be falling faster. But it is a temporary ‘parking place’ for now. We need to stand back here and look at the ‘big picture’ to get some perspective.
When you have a problem it usually falls into one of two categories. The first is a problem that you can cope with, fixed, then all is back to normal. The second is when it affects the structure of your life, can’t be fixed and likely will get worse. That’s what’s happening now to the weaker nations of the Eurozone and will subsequently happen to the Eurozone itself. The political and national differences are huge in Europe, not in the States. Each day we wait to hear if Moody’s or Fitch will downgrade another country. Can these countries survive financially? How far must the decay go before there is a collapse? This is what is infecting investors in Europe. Confidence is plummeting by the day. The situation is direr in Europe, than in the States, because Europe is a group of separate nations, whereas the U.S. is a group of Untied States that considers itself one country. Structurally it is solid as a nation. This is postponing the day of reckoning for the States and will continue to do so until there is another huge country, financially, out there set to challenge its position. But that doesn’t increase confidence in the $. What it does do is to make capital ever more volatile and flowing backwards and forwards to the currency of the month? This instability favors gold.
Europe is seeing very heavy demand for gold from the institutional level down to the small investor. We don’t look at this as, the small man heralding the end of a bull run, but as the rehabilitation of gold as an alternative investment to currencies in Europe. It is returning to a respected place in investment portfolios.
Regards,
Julian D.W. Phillips – www.GoldForecaster.com
-- Posted Wednesday, 9 June 2010 | Digg This Article
| Source: GoldSeek.com
