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

"Asia was quiet overnight, leaving it to London to set the pace for the day.   London held the price at opening levels to Fix at $1,204.75, with four banks buying and one selling.  

No wonder then that the gold price promptly traded the price to $1,206.2 as the U.S. Dollar continued its tumble.   Bear in mind it has now fallen 5% in the last couple of weeks.   This is a frightening move for the world's number one reserve currency.   Note please it fell against the Pound, the Yen as well as the Euro.When early

New Yorkers started to deal, the price slipped back initially, before picking up at the open there.   The trading range is very tight around $1,205 at the moment close to the bottom of its trading range.   This is against a backdrop of a falling Dollar [against several currencies] and a stabilizing Euro.Currency volatility increases because of market action.   Market action becomes extreme because of alarming realities.  

We are seemingly in a world where such extremes are becoming the norm.   Worse still we are blanketed by reassurances that try to calm us all, obscuring facts that would alarm us and have us act in extreme ways.   Gold is steadily being accumulated.

Gold – Very Short-term

With the trading range of gold tightening to a $3 or 4 range at most pressure is building up that will trigger a strong move very soon.  For more precise forecasts on a weekly basis subscribe through or].

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Silver – Very Short-term

Silver is holding at $18.32, down slightly but in line with gold.   We do expect it to follow gold closely when the strong next move comes, soon. Silver has moved into a higher risk area now as has gold.

Gold Price Drivers

The rapidly falling U.S. Dollar has de-coupled from gold over the last few weeks and will stay de-coupled.   The steady gold price as the $ fell 5% demonstrates that.   The fact that the $ has declined even against a suspect currency such as the Pound Sterling is an indication of the underlying state of the currency market and its woes.

Is this why the I.M.F. warned emerging economies to consider imposing incoming currency controls?   Is the 'carry' trade moving funds to the high interest paying nations?   Or is money actually fleeing the U.S. $ in expectation of a significant fall, [an extension of the one we are seeing now?].

Please note that this week we have been able to highlight a different macro-economic problem that is structurally important to the gold price, each day.   We do not believe that international cooperation is at a level that is capable of resolving each one of these, leaving a very positive environment for gold.


Julian D.W. Phillips