Gold and Silver's Daily Review for 18th November 2010

gold-forecaster2The desire to keep financial sovereignty is driven by politics.  Anyone who knows the Irish knows that they will guard this fiercely, even when the EU and particularly Germany wants to hold the Eurozone together.


Meanwhile the euro didn't recover yesterday, the dollar's fall accelerated past that of the euro. It is currently standing at $1,3653 down from $1.342: €1 from yesterday. While the Eurozone is holding together more and more people are expecting the debt distressed members of the Eurozone to eventually be jettisoned from that currency bloc and will have to resurrect the currencies that stood before they joined the Eurozone. This will devalue their currencies internationally while the euro will soar against all currencies. But whether we are right or not, what is a fact is that confidence in the Eurozone, as it stands now, is ebbing fast. Consequently and with the state of the U.S. dollar and a rising China, confidence in the fiat currency system is also ebbing.

The WGC demand report says that industrial and jewelry demand for gold has recovered to levels seen when demand was close to its best.   Now add to that central bank activity in the gold market and it becomes difficult to see where gold's fall is going to come from. Gold Fixed at $1,356.75 and looked solid in recovery.

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Gold – Very Short-term

Gold has jumped strongly overnight [$24] and should continue to consolidate with the bias to the upside in New York today.   However, the ebb and flow of the market will continue, so as part of this gold may retreat too.

Silver – Very Short-term

Silver should continue to consolidate with the bias to the upside in New York today.   However, the ebb and flow of the market will continue, so as part of this gold may retreat too.

Gold Price Drivers

While the Eurozone crisis is far from over, numbers out of the U.S. were disappointing too.   It is hard to tell whether the dollar will fall further than the euro, but investors would be wise to look at the big picture for gold and not just at the $: € exchange rate.   That big picture shows the world two leading currencies to have deep structural flaws that indicate that they will not be able in the future to provide the level of price stability that their money should.   The potential for volatility in the inherent value of both the dollar and the euro is great.   Every day investors in the East are looking to gold as real money, not paper currency.   In the West that confidence is being eroded too, but slowly because paper money is all that the developed world has known.

Regards,

Julian D.W. Phillips