While gold pulled back to $1,662 in Asia and ahead of London’s opening the gold price held at these higher levels.   At the Fix, which we see as broad gold market opinion on the demand /supply situation the price was Fixed at $1,664.25 and in the euro at €1,070,61 a new record high.

The dollar is up against the euro at $1.4215 as against yesterday’s €1.4185.   With the Bank of Japan’s interference in the foreign exchanges and more Japanese QE, the Yen has fallen from yesterday’s Yen 77.2 to Yen 80 against the dollar.   The B of J wants it to hold at Yen 80 – 85 against the dollar.     The dollar rose against the Swiss Franc from o.7767 to 0.7779 but more should be expected from the SNB.   Just ahead of New York’s opening, gold rose to $1,665.55 and in the euro to €1,169.05.   Silver was Fixed at $41.62 up from yesterday’s $39.73.   Ahead of New York’s opening, silver was trading at $41.66.  

Gold _{(very short-term)}

The gold price should have a steady to stronger bias today in New York.

Silver _{(very short-term)}

The silver price should have a steady to stronger bias today in New York as it follows gold.

Price Drivers

The Bank of Japan has been quick to act in the markets weakening the Yen by nearly 4% in a day.   Of course, gold prices rose by the same amount apart from moves prompted by stronger demand.   The same will be true in the Swiss Franc shortly.   Investors in bank deposits in these currencies will be shocked to see their values so quickly reduced in what was until yesterday one of the safest havens out there.   Bear in mind that exchange rate intervention is a short-term measure at best.   They usually fail to work too.   With Japan acting to protect its international trade competiveness we were not surprised to see them virtually double their Quantitative Easing as well.   Switzerland will follow the same road we believe.

Repeat: “This is a significant day in the global monetary system.   For the last 40 years the developed world has insisted that currencies are the definitive money and that gold [it goes without saying too that silver is the same] is a ‘barbarous relic’.   Reflect, if you will, on currency and national debt management over the last four years and the decade of blithe confidence before that.   The smart money went into gold during this time and has multiplied six times in a decade.”  We have produced an article explaining this further in the Gold & Silver Forecasters.    

The big change we are seeing is that currencies will be manipulated even by governments with the strongest as well as weakest currencies.   The Chinese saw this, years ago and have followed such a policy to their benefit for years now.   Don’t expect them to change now.   It’s every man for himself in the world’s foreign exchanges!

Regards,

Julian D.W. Philips for the Gold & Silver Forecasters

-- Posted Thursday, 4 August 2011 | Digg This Article