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


Asia did little to the gold price overnight and London dropped it a few notches to $1,330 before the Fix.   The dollar gained strength across the board leaving the gold price intact in the euro.   We are of the opinion that currency markets are being "assisted" in moving currencies to chosen levels.

We do not expect 'official' confirmation of this, but you will see it when you see exchange rates completely defy economic fundamentals.   Intervention is a dangerous practice in this world where nations like China hold far too many U.S. dollars and will welcome attempts to buoy the dollar exchange rate, so they can unload their dollars into strength.   Physical demand will continue to buy the dips below $1,350 but without chasing prices.   This will allow prices to ease, without precipitous falls.   It removes supplies from the market underpinning prices well. Over time persistent physical demand will always overwhelm traders.

The body responsible for oversight of the gold and silver markets, among others, the CFTC has stated that market players have made "repeated" and "fraudulent efforts to persuade and deviously control" silver prices.   For many years commentators like Ted Butler and GATA's Bill Murphy have called attention to market manipulation and now this official body has done so, at last.   Whether the commission can stop such practices remains to be seen?   We do expect those involved to cover their tracks, so watch the silver market in particular to see potentially dramatic moves!

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Gold – Very Short-term Again gold should continue to consolidate in the current trading range today in the U.S.

Silver – Very Short-term Again silver should follow gold and consolidate in the current trading range today in the U.S. with a stronger bias than gold on the upside.

Gold Price Drivers

We should not underestimate the impact of the cry of 'foul' by Mr. Chilton a CFTC Commissioner in the silver market.   Don't be surprised if you hear the same cry in the gold market soon.   If pursued to the extent justice demands not only will the practice be stopped but positions supporting that practice closed.   This could well see prices jump as it is believed that the aim of such fraudsters has been to keep silver and gold prices artificially low.   Most such practices, it is believed were short-term in nature and not capable of holding prices down long-term.   Hence the rises in the precious metal prices in the last few years.   It is possible that we could see prices readjust upwards in the near future as legal action is initiated against the players.

We will be writing an article on the gold price since 1971 to now to highlight why the rise since 2000 is part of that long-term picture. To receive it subscribe to Gold Forecaster.


Julian D.W. Phillips