Gold and Silver's Daily Review for 25th November 2010

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The dollar: euro exchange rate has barely moved in London and the gold price Fixed just $2 below yesterday afternoon at $1,370.50.   Since then it moved up $2.   That's London.

With Thanksgiving in the U.S. [and we hope our readers are enjoying that family day!] and a half day on Friday we expect little to happen for the rest of this week.   Perhaps the weekend will be a time to reflect on the way forward for the rest of the year.  While 'hope springs eternal' it's taken quite a hammering this week with observers clinging to straws of one statistic or another, but few are convinced that the way forward will be a happy one for the developed world.   It will certainly have a golden hue with a silver lining to it.

Until hostilities jump up a few notches, we do not think a war in the Far East is on the way and we wonder just who would feel that gold should be bought when a shell falls in that part of the world.   Tragic though the events may be, it will not directly affect the gold market.   Rising German, Belgian, Spanish, Portuguese bond rates will trigger more uncertainty and more European buying of gold.   Also while the dollar is rising against the euro, today sees it rising against other currencies too.   This is not as a safe haven move, we feel, but a consequence of a falling euro.   As it falls the 'carry' trade is seeing euro related emerging market currencies fall with the euro.   This certainly lowers the profits on those positions and may well cause them to be cut.   For instance look at the South African Rand, a currency that moves with the euro, it has fallen nearly 4% against the dollar and with the Reserve bank there lowering interest rates there lately, the 'carry' traders appear to be taking some profits.   So these currency moves are not about changed economic prospects but about a time to take profits?

To get precise levels we anticipate gold and silver moving to subscribe through:   www.GoldForecaster.com and www.SilverForecaster.com Apart from covering the gold and silver markets Gold Forecaster andSilver Forecaster are structured in a way that addresses macro-economic factors from oil to currencies covering the pertinent gold markets that directly affect the gold price and some that simply influence it.   It is a "must-read" for all who want to understand why the gold price is moving as it is and why.   It also aims to help you understand why currencies and today's national economic problems are influencing the global economy and the precious metal prices [we cover platinum in the Silver Forecaster too].

Gold – Very Short-term

Gold is unlikely to move solidly in the next couple of days as the U.S. is essentially closed for those days and volumes will be thin.   Prices revolve around the London Fixes.   If there is a large move it will be steadied on Monday when volumes pick up again.

Silver – Very Short-term

Silver is steady as the holiday weekend approaches.   As with gold trade is thin and price moves unlikely to be significant.   If they are they may well be countered on Monday when volumes pick-up.

Gold Price Drivers

It is pertinent again to ask the questions, "Do you feel you should buy gold?" Or, "Do you feel you should sell gold?"   Your answer will tell you if you are looking at gold itself or the reasons why people are buying it.   We will post part of an article shortly titled, "The Gold Price is not about Gold!" The full article will be presented in the next issue of the Gold Forecaster, which you can read when the holiday weekend moves into cruise mode.

Regards,

Julian D.W. Phillips