Gold and Silver's Daily Review for 5th August 2010
The difference between the Fixings is narrowing just below $1,200. The London Gold Fix was at $1,194.50 on the 3rd August. Yesterday afternoon it was at $1,199.50 and this morning at $1,195.50. The resistance is strong at $1,200. One of the five Bullion banks were buyers and one was a seller and three were neutral. Demand and supply are coming to a balance quickly. Tomorrow [Friday] will be a frantic Friday again, we feel! The currency markets have quietened down too. Is this a quiet before a storm?
The talk of the day is about the Kinross takeover of Red Back. We believe at this point that the deal is a good one. We follow most quality mines and like the best African miners. We always search for value not only in such deals but among the Junior mining companies across the world. After all, one wants capital and dividend growth in the markets. That's part of our template.
Gold – Very Short-term
Gold continues in the gold market as the attack on $1,200 heats up. Moves from here on will be large, once the break [either way] happens. Tomorrow could see a lively market!
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Silver – Very Short-term
Silver is down at $18.35 at the Fix in London and is holding ground just above $18.30 We don't expect much of a move in the price today.
Gold Price Drivers
Physical demand is taking gold back to $1,200. Currency markets did not influence matters today. Investors in gold are forward looking and not swayed by the less important day-to-day matters affecting gold. The constancy of current long-term investors highlights that. They look forward past the next Fed meeting or interest rate meeting to look at the broad future. They are doing this at the moment and are picking up gold at bargain prices.
The presence of central banks, sovereign wealth funds and global investors from the States through Asia gives the gold market a breadth that also reduces the influence of local events on the gold market. Even the prospect of a further recession in the States and the consequential lowering of U.S. jewelry demand is no longer a major influence on the gold price, for the jewelry industry in Asia [a real gold related market] is substantial and set to grow enormously. As a result, the fundamentals for gold continue to improve.
The impact on gold mining companies, particularly the 'Juniors' may well be disproportionately good! We have our favorites and publish these weekly in our newsletters. To subscribe, please go to www.SilverForecaster.com or www.GoldForecaster.com].
Julian D.W. Phillips