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


After Asia took the gold price up from New York's close of $1,343 to $1,248, London Fixed at $1,348.5 this morning.   In the euro gold is also recovering from its recent €956 and stands at €967.   So gold is rising again in all currencies today. Just ahead of New York's opening it did what it usually does and pullback slightly to $1,341 ahead of the afternoon Fix.

The dollar has fallen to an unhealthy $1,3940 and looking weak on the dollar Index as well as against the euro.   Against the Japanese Yen it is the weakest of all despite the threat of more Yen intervention.   With the failure of the Bank of Japan's intervention so far as the Yen is at 82 against the dollar now, having fallen to its lowest level ever we do expect speculators to start challenging the will of the Japanese central bank in the first of several currency crises to affect the world's leading currencies.   The underwhelming performance of the G-7 and I.M.F. meeting has heralded the next set of international currency confrontations to come.

In future issues of our newsletters we will post articles [Subscribers can access our archives] on "Can the G-20 or I.M.F. burst the Gold Bubble?" and "What's driving gold investment, Prudence or Profits?" and "Have Central Banks lost control of the Gold market?" These may or may not be posted on public websites, so subscribe to make sure you get them.

Gold – Very Short-term

Gold should recover today after the quick, sharp pullback of last week.   We expect a positive day for gold today, worldwide.

Silver – Very Short-term

Silver should recover towards its highs today as the mood for precious metals has improved over the weekend.  Silver is now attracting the attention it has deserved for years.

Gold Price Drivers

What happened over the weekend to boost the prospects for precious metals was the confirmation that there is neither the political will or capability of the world top seven nations to cooperate to resolve what is being termed, 'currency wars'.   If that term is an overstatement of the situation it will soon be the correct one.

The I.M.F. meeting at the weekend showed us that nations are still at the finger-pointing stage and nowhere near the problem resolution stage.   With the problems facing the currency world so deep rooted it is going to take a massive worsening of the situation before there is any hint at a resolution.   It is more likely that nations will take their own ways out to bypass the problems.   That may well involve a spread of the capital controls that have already started and could easily lead to protectionism.

We believe that China is already quite a long way along a road that will change the global currency world remarkably.   Few nations are ready for their future moves.

We will be exploring that in the coming issues of the Gold Forecaster and Silver Forecaster in the weeks to come.


Julian D.W. Phillips