Gold and Silver's Daily Review for 11th November 2010

All eyes are on the G-20 meeting as frictions mount between China and the U.S.   The U.S. takes the attitude that the best thing for the world is for the U.S. to grow.   Unfortunately this means dollar weakness, so adjust!  China says, you're playing the games you are accusing us of so don't expect us to adjust.   Result monetary conflict, capital controls, self interest veering towards protectionism.   The British Prime Minister can say he will fight this, but so what, he won't change the situation.   Not until global interests precede national ones.   That's why refuge is being sought in gold by all and sundry.

The dollar continues to be helped to strengthen and rose to $1.37 24, but gold rose too.   In the euro it Fixed at €1,028.   This hurts the perceived coupling of gold to the euro doesn't it?   Oh, the G-20 has another day to run before a joint statement is issued.   The depth of that statement will tell you what lies ahead for gold and silver too, as well as for currencies.

Apart from covering the gold markets Gold Forecaster and Silver Forecaster addresses macro-economic factors from oil to currencies covering subjects that directly affect or influence the gold price.  This week and next, we will cover the concept of gold being used as a reference for currencies. Only part of it will be seen in the public domain.  It is a "must-read" for all who want to understand gold and silver.   It helps you understand the why of the gold & silver price moves.  [We also cover platinum in the Silver Forecaster too].   Without understanding can you successfully profit from these markets?

Gold – Very Short-term

Gold continues to consolidate but rise in real terms.   We expect today to continue to have a positive bias, but not too much movement in New York and the dollar.

Silver – Very Short-term

Silver investors in the Silver Trust have just seen some huge institutional position taking.   Around 460 tonnes was bought for the long term there.   We expect silver to continue to consolidate throw off any influence from the increase in margin requirements.  Currently sitting at $27.5 down from $28, we continue to see a positive bias with the market continuing to consolidate, for the time being, in silver.

Gold Price Drivers

We are living in the age of consequences.   We believe that the events unfolding in the U.S. are just about beyond the ability of the government or the Fed to control.   All they can do is to contain damage.   As this reality dawns upon the financial world we expect to see attitudes change, global economic cooperation diminish and self-interest to take over, as each nation tries to protect itself from these consequences.   For instance, with capital controls stemming inflows, what would happen if the dollar became attractive and the 'hot money' decided to go home?   The damage inflicted on emerging and other nations would precipitate outflow capital controls.   Its like a tsunami both ways!   Either way gold is benefitting, simply because it protects value.

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Julian D.W. Phillips