Gold and Silver's Daily Review for 22nd Sept 2010

goldforcaster2You will probably understand what all the noise about a double-dip recession or very slow growth is all about now.   The Fed's statement tried not to say the worst but could not avoid what sat between the lines.  

Growth is slowing and may continue to do so, giving rise to fears of deflation, were the unwritten words. The solution; the Fed will bring in a dose of quantitative easing to tackle it.   That's a bit like pouring water into a swimming pool with a growing large leak and hoping swimmers won't worry about it.

After a lower close in New York at around $1,272 gold took off after hours and rose to open at $1,287 before London opened.   London took it up $1 before the Fix.   The fix at $1,291.75 was a first because the physical and large buyers at the Fix set a price above market and a new record at that.   The gold price was rising ahead of New York still.

The U.S. $ broke through support on the dollar index and tumbles against most currencies.   There are few nations out there that will accept a tumbling dollar.   Competitive devaluations from Japan will continue.   With the Swiss Franc at 0.99 to the $1, the pressure is on strong currencies to weaken to keep internationally competitive.   This will have grave implications for the monetary system and the real value of currencies.   We won't go into that here, but will in the next issue of Gold Forecaster and Silver Forecaster. We recommend that, to ensure you get the full picture of these developments that we offer you, subscribe through: – or to our newsletters.   Who are we? We are a newsletter that helps you to understand gold, its market and its place in the financial world.  In addition we have a 95% correct record on the Gold & Silver Prices.  

In the next issue of our newsletters we will post articles [Subscribers can access our archives] on "Who will buy the last 88 tonnes of gold from the I.M.F." and we will describe the implications for the gold price of the Fed's statement, the falling dollar and the reactions in the world's foreign exchanges. To read these and other [for subscribers only] important pieces and to find out our mining share preferences and for our full range of weekly forecasts please subscribe through: – or for our newsletters.

Gold – Very Short-term

Gold will be positive today at new record levels.   New York has yet to follow through.   We expect a positive day for gold.

Silver – Very Short-term

Silver is over $21 and will see another positive day in New York.

Gold Price Drivers

Please note a remarkable event this morning.   The London Fix was at $1,291.75 a record gold price.   The market in London took it higher ahead of New York.   This means that institutional buying is driving the gold price up.   These buyers are not too concerned about the price, but are concerned about acquiring gold itself.   We are reminded of the saying, "people don't buy gold to make money, but is bought by people who have money".

The Fed's statement was alarming as it almost confirmed the worst for the U.S. economy and more pertinently for the U.S. dollar.

We have just seen a 'gear shift' in the currency and gold markets.


Julian D.W. Phillips