You have to listen very carefully to the news these days. For instance, today you might have thought that the EU will now fine nations that go over certain deficit levels. On listening carefully you hear that they have agreed to look at fining nations that do. So it has not happened, but may well happen. This world is becoming very suspicious of government intentions and promises and want to see concrete [that’s stable concrete] legislation that will be effective.
Yesterday afternoon the London Fix was $1,333.50, this morning $1,336.75 and moved up ahead of New York’s opening to trade at $1,353. How many of you out there are thinking this must be the large banks closing their short positions in gold? As we are at month end the games highlighted by the silver CFTC Commissioner [of ‘spoofing etc] are unlikely to be played today. We will produce a commentary on this in the next issue of our newsletters.] That would be blatant breaking of regulation in public. Let’s see what happens?
Now look at currencies. The euro is not particularly strong at $1,3868 but the Yen, Sterling and the Swiss Franc are as strong as ever. Fundamentals have as we said before the persistent taking of available offerings off the market so that when the investors that like to buy on the rise appear they have to pay up to get gold. It seems this is happening now.
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Gold Price Drivers
You can actually ‘feel’ confidence falling in the developed world’s financial markets. Despite EU Ministers being pleased with themselves, the ‘agreement’ they came to contained more symbolism than substance. So that has not done the euro that much good. Consequently, we have to look at the other strong currencies for evidence of the dollar’s performance. Against the currencies like the Swiss Franc we see both the euro and the dollar are falling, so gold is reacting to that. This is part of the on-going trend moves.
We will be writing an article on the gold price since 1971 to now to highlight why the rise since 2000 is part of that long-term picture. To receive it subscribe to Gold Forecaster.
We expect to see rising volatility, uncertainty and general stress levels to begin rising across the world from now on. This will likely become an ongoing feature of the investment world.
