Gold and Silver's Daily Review for 27th August 2010


Overnight the gold price stepped back a step or two and settled at $1,235 overnight.   The market is cautious now as the biggest resistance from $1,240 to $1,260 stands in the way of more rises.   The morning Fix was $1,234.50.   More bad U.S. economic news is expected today, so it could be a frantic Friday again.

We are including an article [with the important conclusions for Subscribers] on The Changing Face of Investing – From Capital Growth to Interest/Dividend earning instruments in the next issue of the Gold Forecaster.   We feel it is important for investors to know that these changes are critical to the preservation of their hard won wealth!

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Gold – Very Short-term

The Fix at $1,234.50 tells us the gold price will not move until the U.S. news is out.   This raises the risks in the market for gold investors.  The gold price could go either way today with the upside most favored.

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Silver – Very Short-term

Silver is sitting just below $19.00 after Fixing in London at $19.03.   It too is waiting for direction from gold.   So too in the silver market, the risks are raised today as the silver price could go either way, but if we HAD to choose we favor the upside.

Gold Price Drivers

More and more media and economic commentators are allowing for a double-dip recession while insisting that it is not going to happen.   It has to be said that this is not the time to argue the point.   This is the time to protect yourself against the possibility of a double-dip recession. [We are producing an article on what a double-dip recession will mean for gold].   Please note that there exists the danger of the Eurozone removing stimuli and the U.S. continuing to stimulate.   This would lead to a strong Euro and a weak Dollar, also to be seen as gold positive.  Now add to that the Bond Bubble ballooning further.   If you believe that interest rates are not going to rise at all, then this bubble won't burst.   If you believe that eventually interest rates will rise, then it is a case of when it will burst.

Japan's monetary overlords are deciding whether and by how much to intervene in foreign exchanges to weaken the Yen and stimulate Japan's economy.   They are being watched carefully and could result in Japanese gold investors getting into the gold market again.   They are mired in deflation, which is why the Yen is so strong.

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Julian D.W. Phillips