-- Posted Monday, 10 January 2011 | | Source: GoldSeek.com
We have heard from Brazil’s Finance Minister that the world is headed for a “Trade War”. Is this really likely? Yes, it is possible! What are the weapons of a ‘Trade War?’ What does this mean for us all and for precious metals? It will mean different things for different countries. Countries that have a surplus Trade Balance and higher interest rate levels will feel upward pressures on their exchange rates such as Brazil, which has seen its $30 billion trade surplus fall to a $6 billion trade deficit, because of its rapidly rising exchange rate. The theory is that Brazil should now be enjoying cheap imports, for infrastructure and for consumers, so seeing its overall quality of life improve through cheap imports. But China says no, we want to build our economic structures internally so we can build what we need without importing cheaply. We want to keep building our surplus and keep our export industries profitable. The U.S. has engineered a falling exchange rate for internal reasons, but knows it will enjoy the same benefits as China in the process.
The week starts with the U.S. dollar strong against the world’s major currencies as well as against gold. The euro stands at $1.2913 and the Swiss Franc at 0.9649. The morning Fix in London reflected the strength of the dollar at $1,368.25 and euros €1,060.33. But we have to ask is it getting stronger for the right reasons?
Apart from covering the gold and silver markets Gold Forecaster and Silver Forecaster are structured in a way that gives perspective to macro-economic factors from oil to currencies covering the pertinent global gold markets that directly affect the gold price and some that simply influence it. It is a “must-read” for all who want to understand why the gold price is moving as it is and why. It also aims to help you understand why currencies and today’s national economic problems are influencing the global economy and the precious metal prices [we cover platinum in the Silver Forecaster too]. Subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].
Gold - Very Short-term
The gold price holding this morning but it may well be volatile today, with a weaker bias, in New York today.
Silver – Very Short-term
The silver price holding this morning but it may well be volatile today, with a weaker bias, in New York today.
Gold Price Drivers
Today’s gold price driver is still a stronger dollar against all currencies, but not so strong against the world’s leading currencies except the euro. The gold price in the euro remains firm. The gold price in the dollar is not a real indication of what is happening in the gold market. What is happening in the currency world is disturbing. The warning of a “Trade War” from Brazil comes after more than a couple of years of currency disturbance. So, for us to receive such a warning now, tells us that nothing has or is being done to stop it. This potential structural pressure is one of five or more that will mar the globe’s economic landscape this year. We suggest you subscribe to the Gold Forecaster and Silver Forecaster where we will detail all the factors that will join to jeopardize the global economic landscape in 2011, keep you in touch with their progress and give you our forecasts for 2011. These will confirm the when and the why the gold and silver markets will continue to thrive. We will also follow the battles in the ‘Trade War’.
We asked you to watch the jobs report for confirmation that the U.S. economy has at last turned up, on Friday. Mr. Bernanke has confirmed that this may take several years before they really do. So we need more evidence to convince the markets that the recovery has gained traction
Regards,
Julian D.W. Phillips
-- Posted Monday, 10 January 2011 | Digg This Article
| Source: GoldSeek.com
