-- Posted Monday, 23 May 2011 | | Disqus
It doesn’t look special, but today is proving remarkable! In the euro the gold price is at record levels at €1,078.01. In the dollar it looks OK at $1,509 but it has been at $1,578 before and is now nearly $70 off its peak. Why? The dollar stood at a recent high at €1: $1,3997 early in London. It has started to weaken slightly, but its rally looks intact still. So the dollar is looking strong, or is it the euro that’s looking weak? Investors have to discern whether it’s gold that’s performing or currencies that are underperforming.
At the Fix, gold was set at $1,508.50 and in the euro at €1,077.81, which confirms that this price is the consensus in the physical gold market.
Ahead of New York’s opening the gold price in the dollar stood at $1,507.20 and in the euro at €1,077.58 and the dollar stood at €1: $1.3999 and looked like weakening.
Silver is finding it hard to follow gold at the moment and is standing at $34.78 three cents down on Friday’s price after a Fix of $34.70.
Gold - Very Short-term
Gold prices should show a positive bias today, in New York.
Silver – Very Short-term
Silver should continue to show a positive bias today, in New York.
Silver & Gold Price Drivers
With the euro price of gold at new record highs demand for physical gold remains strong. This is happening at the same time as the dollar is only rallying against the euro. Against the Swiss Franc and other strong currencies it remains lackluster. So we must conclude that it is the euro that is weakening against the dollar and gold. We believe that gold is moving to the position that it defines value better than the dollar does or the euro.
This is because the problems that the Eurozone and the United States has to contend with really are undermining the ability of these currencies to represent value. So long as this remains the case [and we cannot see an end to these problems] the world will continue to move to a point where they feel that gold is a ‘reference’ to real value [As the Head of the World Bank suggested it should last year].
This week the Eurozone has to tackle its most serious crisis yet. After bailing out Greece before, they now have to face a reality they did not factor in properly. In formulating the bailout package for Greece they did not allow for the slowing of revenues that would be used to repay Greece’s debt including the bailout. In itself this undermined confidence in their abilities, because they should have done. Now they are calling for more loans to and more austerity from Greece. The markets have to ask, are they going to get the formula right now? If they don’t make sufficient allowances for Greece’s plight now, then the EU itself will come under threat and the word default will become a reality for them. No wonder the euro is falling and gold is rising.
Which is the most realistic price for gold, the euro or the dollar? Or does gold measure the price of the dollar and the euro in value terms? Or is such a discussion academic? If you ask a Chinese investor the price, he will quote a Yuan price. Ask an Indian and he will quote a Rupee price. That says it all!
We will look at “Why is silver so volatile?” in the next issue of the Gold Forecaster and the Silver Forecaster. We cover the implications for gold in macro-economic and currency events in all the issues of the Gold Forecaster and the Silver Forecaster for subscribers. [The Gold Forecaster and Silver Forecaster are a “must-read” for all who want to understand why the gold and silver prices are moving as they are and why.] Subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].
Regards,
Julian D.W. Phillips for the Gold & Silver Forecasters
-- Posted Monday, 23 May 2011 | Digg This Article
| Source: GoldSeek.com
