-- Posted Tuesday, 6 July 2010 | | Source: GoldSeek.com
The Gold Fix in London this morning was $1,210.75 with demand coming through London holding the price at that level after the Fix. Just before New York opened the gold price tried to weaken towards $1,205.
One of the tragedies of the realities of humanity today is that perceptions are more powerful than facts. Facts may or may not support perceptions. Facts are only established, after the event. For an example, are we headed for a double-dip recession? The facts to date support that, we believe, but the case is being argued. The markets reacted on Friday as though it is a fact. Markets tumbled like a stone as investors de-leveraged on purpose, or through the triggering of ‘stop losses’ and computer programs. So the perception is that we are on the way to a “double-dip recession.
M. Claude Trichet the head of the European Central Bank, on whether a double-dip recession was headed our way said in a hormone-free way, it was “not necessarily so”. The public Fed language pointed that way without actually saying so. The perception is that it is coming. As this affects consumer’s confidence and encourages holding back on spending, the perception may be made to become fact.
You, the reader must decide whether this is an opportunity or not. Translate this into the gold market and the question becomes, have we seen the bottom of this fall yet?
Gold - Very Short-term
While gold has pointed to a softer day, there appears to have been solid price limit buying from the start of London’s day on. This is not the sort of buying that believes the gold price will fall. Nevertheless, the week could be vigorous for investors in New York again.
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Silver – Very Short-term
Silver, likewise, seems to have a solidness as it holds at $17.90. Silver will track gold again today and today should set the tone for the rest of the week.
We will be addressing the issue of “Is Silver de-coupling from gold” shortly, in the Silver Forecaster newsletter.
Gold Price Drivers
If Europe falls back into recession, it will drag the U.S. there. The U.S., at best, is on the brink of recession, at worst, is there now. The true level of consumer and business confidence is establishing the fact right now. The trouble is the last recession knocked the stuffing out of the economy.
Another recession would lead to major structural changes. It would change investor’s approaches to markets and in turn the markets themselves. Just the single shot of a significant European bank failure could trigger market changing events!
Oh, for those who see the fall as a breakdown of the gold market, remember central banks want gold in volume not profitable investments. This means continuous buying. A big fall in the gold price may give them some of the volume they want.
Regards,
Julian D.W. Phillips
-- Posted Tuesday, 6 July 2010 | Digg This Article
| Source: GoldSeek.com
