Gold and Silver's Daily Review for 16th Sept 2010


Gold is holding a Dollar below the level of the morning record Fix of yesterday after a quiet Asia overnight.   Some profit taking was seen in the SPDR gold E.T.F. of around 4 tonnes, but we believe that such traders will be back on new bad news.

With the Japanese Yen 5% weaker after heavy intervention by the Bank of Japan the battle lines have been drawn on the Yen’s value.    To those with no experience of central bank exchange rate intervention this appears to be a saving act by the B. of J.   History shows that it is the last desperate measure of a besieged currency.   We have yet to see in 40 years of watching currency markets, market intervention work.   It is a red rag to a bull to those who believe the Yen should have gone stronger.   We ourselves mentioned a target rate of 78.   This is due to the entire fundamental picture of the Yen coming together in a specific price.   Buyers now see they have a nearly 10% potential profit as well as their desire to hold yen succeeding.   Now add serious speculation of the George Soros [– I made a billion Pounds overnight fame –] and you have a serious crisis in the making.   To those who saw the Yen as a safe-haven, the lesson is there is no such thing as a currency safe-haven all currencies have to protect international trade competitiveness at the end of the day.   Gold doesn’t have to, nor is it related to any nation and its economic situation.

This morning London Fixed the gold price at $1,271.25.

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We are developing the theme of the last article [Subscribers can access our archives] onDeveloped World Demand & Supply of Goldin the current issue of the Gold Forecaster, and writingWill the Chinese Yuan rise – what of Chinese Gold Investors?” and “Will the Silver price de-couple from Gold” These will not be issued in full as short articles, if at all, to gold sites in general. To read these important pieces and to find out our preferences and for our full range of weekly forecasts please subscribe through: – or for our weekly newsletters.

Gold – Very Short-term

Gold is taking a breath, but as you can see there is hardly any pullback from the record high. U.S. demand forced the price to these levels, but the institutional buyers will have to move their limits up, if they want to access gold. New York is expected to take prices higher as short covering and new buyers start to chase prices.

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Silver – Very Short-term

Silver was fixed at $20.76. We expect a positive day for silver again.

Gold Price Drivers

The big lesson of the last two days is that currencies are no place to hide one’s wealth. The intervention in the Yen exchange rate aptly shows that. Switzerland forced its currency lower last year; Canada has to keep tied to the U.S. etc. No nation can afford to let its currency be a long-term safe place to hold one’s wealth. But this idea is entrenched in many investors’ minds. This will change. As the Yen crisis move to the next stage Japan will have to use other tactics. Inward Exchange Controls may well be contemplated.


Julian D.W. Phillips