Gold and Silver's Daily Review for 19th July 2010


"Last week saw the gradual switch of gold market focus from Europe to the U.S. as the Euro rose to almost $1.30 up from its recent low of $1.23: €1.   Fears that the U.S. is headed for a double-dip recession appeared to mature on the back of reports that U.S. home builders are turning increasingly pessimistic after home sales dried up when a federal subsidy expired.

As the housing market underlies the U.S. consumer, [who is the foundation of the U.S. economy] such a loss of support is critical to the future of the U.S. economy.   Until the U.S. housing market is sound again, we cannot foresee a healthy U.S. economy.

ALL markets from equities to commodities may well see a bout of deleveraging now as they fear  a new recession

London Fixed in the morning at $1,190.25, then in the afternoon at $1,181but with four banks buying and one selling again.   New York did not vary the price in the morning there, showing that physical London market is calling the shots still.

Gold – Very Short-term

Gold will continue to have a weaker bias today as the poor economic news continues to see investors move away from falling markets.   But don't think for one moment that the gold market is dependent on the U.S. economic outlook.   Much more is going on in gold!  For more precise forecasts on a weekly basis subscribe through or].

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Silver – Very Short-term

Silver joined in the tumble we warned of last week and now stands at $17.60.   Silver may show the weaker bias today too.

Gold Price Drivers

Now, global financial attention has turned to the U.S. and the bad economic news for the economy that is seeping out.   By way of reaction we believe de-leveraging will happen to gold as well as all other markets, but nowhere nearly as seriously as in 2007 / 8.

The process will be much faster too.

We have to say and say emphatically, that gold did well in deflation and will do again.

More importantly, further "Quantitative Easing", won't simply be to lift the U.S. economy, but this time it will have to accelerate to prevent a deeper recession that sees money velocity slow as well as disappear into decline.   Tax revenues will tumble as well, exacerbating budget deficits.   This is a favorable climate for gold.


Julian D.W. Phillips