-- Posted Tuesday, 8 February 2011 | | Source: GoldSeek.com
After Fixing twice at the $1,347 level, gold moved higher in later trade and Asia held it up at that level overnight. This morning in London the gold price quietly held that level adding a tine $1 to the price before it was Fixed.
The dollar was slightly weaker in London ahead of the Fix at $1.3660: €1 and so the Fix in London this morning was higher at $1,354.00 [previously $1,347.50] and lower in the euro at €992.74 [previously €997.04]. This is a classic case of currencies clouding the water. Ahead of New York’s opening it was trading slightly lower at $1,349.
Gold - Very Short-term
After an initial fall in New York, we expect gold prices to recover leaving the gold price slightly stronger in New York today.
Silver – Very Short-term
Silver was Fixed in London this morning at $29.42 after the Monday’s Fix at $28.41. We expect it to continue to consolidate but with an upside bias, again, in New York today.
Gold Price Drivers
Today oil prices are falling and the revolutions are losing steam. You can’t rely on perpetually enthusiastic revolutions to topple government unless they have an underlying organization. Until they do, for instance in Egypt, negotiations cannot be effected properly. It does look like the Vice President of Egypt Mr. Soliman is in control of the process not the demonstrators. August [when President Mubarak steps down] is a long way away. Having said that, any move that tends to keep the old guard in power, will incite demonstrators again. The story has a long way to run and has the potential to hit the oil market in the future. If contagion spreads to oil producers, we will continue to see three figure oil prices. Gold may be indirectly affected through the uncertainty created.
When we talk of gold providing financial security in the east, we mean far more than just an under-the-mattress stash. We are talking a far more sophisticate concept that looks simple. Both the Indians and the Chinese are fully aware of the abuses government can bring to money. They are also fully aware that gold tends to be immune to these abuses in the longer-term. While currencies are a ‘means of exchange’ [for instance in day-to-day business], gold, over time, is a real ‘measure of value’. This means that it cannot be cheapened through over-printing. In wars it stands as the only trusted value between enemies. Currencies can’t do that. As the potential for structural problems in the monetary system mount in 2011 the acceptance of gold as real money continues to grow. Asian cut to the chase and avoid the process of decay in currencies and go straight to gold. This is in line with what central banks are tending to do. They feel it important to hold gold for the same reasons.
We note that the selling of shares in the gold ETF, SPDR, appears to have ceased.
Currently, we are presenting in the Gold Forecaster, a series called “Financial Earthquakes”, covering the main crisis areas in the financial world and what they could lead to, as well as our gold forecast for 2011.
[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 and silver market influences that directly affect the gold and silver prices. It is a “must-read” for all who want to understand why the gold and silver prices are moving as they are and why.]
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Regards,
Julian D.W. Phillips
-- Posted Tuesday, 8 February 2011 | Digg This Article
| Source: GoldSeek.com
