-- Posted Monday, 21 June 2010 | | Source: GoldSeek.com
"On this longest day of the year [Northern Hemisphere], with no froth, but in thin trading, gold [Gold was Fixed at $1,259.50] hit at a new record high at $1,262 on Friday as hedge funds stopped holding back as they saw Technical barriers fall. In the opening hours of Monday, Asia held the gold price above $1,260 in the face of the news that China will be, “more flexible” in its Yuan exchange rate. For those who expected a jump in the value of the Yuan, they will be disappointed, which is another reason for Asia holding gold prices up. London followed through taking gold to the mid-$1,260 area by 0900 hrs its time, before pulling back to the high$1,250’s. Ahead of New York, gold was trading at $1,256. With the coming “Stress test” of 25 of Europe’s largest banks markets are braced for more bad news on that front.
Silver is following through at $19.42 up 22 cents, before pulling back to $19.35, so far.”
Gold - Very Short-term
In a surprise move, China is to allow ‘more flexibility’ in its exchange rate. Asia was not fazed and traded gold at record highs, again. We don’t believe that this is a signal for a significant appreciation of the Yuan. The Chinese are inscrutable, have been for centuries, so expect this move to be the tip of another very different iceberg to what the world currently expects. We believe it will be gold positive and cause more ruptures in the present currency world than we have seen in the last few years.
Today should see another positive day in gold.
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Silver – Very Short-term
Silver will continue to move in tandem with gold today. Keep your eyes on the Silver Trust!
We will be addressing the issue of “Is Silver de-coupling from gold” shortly, in the Silver Forecaster newsletter.
Gold Price Drivers
The Common Market is to stress test 25 of its largest banks shortly. The probability of one being found ‘wanting’ is high and worrying. But today, the € is rising against the $, strongly! We confirm that the € and the $ has de-coupled from the gold price. Gold is reflecting the instability and uncertainty of the financial world by rising steadily. What’s happening now to gold is yet another step in its return to a significant role in the monetary system.
It is worth repeating that the fundamentals of the financial world are under stress. We see the new ‘flexibility’ of the Yuan, as a precursor to the internationalization of the Yuan.
First, in Hong Kong it was used in international trade. Once Chinese banks could cope with this new role for the Yuan, it was extended to Guandong Province [the hub of Chinese manufacturing] and now it is close to going international, completely. Ask yourself, what if foreign exporters were paid in Yuan and foreign importers were able to access Yuan to pay for their imports? More on that in the newsletter [subscribe through www.GoldForecaster.com].
Regards,
Julian D.W. Phillips
-- Posted Monday, 21 June 2010 | Digg This Article
| Source: GoldSeek.com
