Gold and Silver’s Daily Review for 14th October 2010
As the dollar continued to fall through $1.4 to the euro and is now aiming to go over $1.41 other currencies and precious metals are reflecting that fall. The gold price in Asia and London today raced up to $1,380 and silver to $24.50. This is another 1.5%, but it feels more in dollar terms. It has hardly moved from yesterday’s €980 level highlighting that this is all about the U.S. dollar.
By the lack of buying of gold Exchange Traded Funds, particularly in the States, dollar investors appear confused at the gold’s dollar price rise. We are not far off from the time when you will not ask what the gold price is in dollars, but what the dollar’s price is in gold. Just look at the fall in the dollar in the Yen, Pound, Swiss Franc and you see that gold is hardly moving in those currencies. We believe the dollar has a way to fall still.
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Gold – Very Short-term
Gold should continue remain positive in New York today.
Silver – Very Short-term
Silver should continue to behave positively event though it has jumped a dollar to $24.5.
Gold Price Drivers
It is hard to adjust an attitude established over forty years. In that time, the U.S. dollar has been the unquestioned measure of the value of everything, including precious metals. Then at the turn of the century, its reliability came into question as the Euro was born. At that time they were on par, one for one. Now, as the euro rises and the dollar falls towards $1.50 and maybe more, the dollars reliability is under fire. This change is seen in the world’s foreign exchanges and is due to the potential rise the sheer volume of dollars in the States. These are flooding out into other currencies forcing them up and the dollar down. While this continues any assets as well as currencies and in particular precious metals are going to rise in dollar terms.
We have written about these in the next issue of the Gold Forecaster. Subscribe if you wish to understand these facets of the gold market.
Julian D.W. Phillips