Gold and Silver's Daily Review for 8th September 2010


London held the gold price to yesterday's levels in New York and Fixed in the morning at $1,258.00.   There is a perceptible change of mood not only in the gold market as the busy season takes hold, but in global markets in general.   Of concern to Japan is the ongoing rise of the Yen, again, alongside the Swiss Franc.

The reason most markets are very sensitive is that there have not been successful solutions to the problems the globe is facing nor are future problems being adequately addressed.   We expect the levels of uncertainty to grow from here onwards.

It appears that the failure to successfully get the developed world economies back on a growth tack has made the structural problems it faces more serious and more capable of delivering more pain to currency and equity markets.   The Sovereign debt crisis is one of these as we hear talk of Ireland and its banks facing potential closure.   All of this continues to persuade long-term investors to favor gold.

We are developing the theme of the last article [Subscribers can access our archives] on "The Yuan goes Global" in the current issue of the Gold Forecaster, and commenting on "What will happen to gold in a slow recovery".   These will not be issued in full as short articles to gold sites in general.   To read these important pieces and to find out our preferences and for our full range of weekly forecasts please subscribe through: – or for our weekly newsletters.

Gold – Very Short-term

The gold price is robust today and moved around $1,260 after the Fix.   Bearing on mind it was New York that took it higher yesterday and the shape of the market at present we expect another positive day today.   However, please note that we have moved back into the higher risk area for the gold price, so be careful out there!

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Silver – Very Short-term

Silver was fixed at $20.02 and is even more robust than silver.   We are discussing the reasons why and where it is going now in the next issue of the Silver Forecaster this week.   We expect the silver price to show a stronger bias again today.

Gold Price Drivers

The better-than-expected news of last week, on the housing market in the States, has been digested and weighed.   It is clear that it was not enough to dispel the fears of deflation.

The new stimuli from the Administration on further stimuli is aimed at the right place, but will it be enough to change the consumer's mood and persuade them not to save but to spend?   If it isn't, then the President and the Fed may have to fight deflation.   This is a far harder battle than inflation to win.   The final tactic is to let inflation go to persuade savers that it is not worth saving.   This tactic has been used twice in the past and was successful, while at the same time being gold positive.

Long-term investment demand is waiting in the wings for prices to move out of this tight trading area the gold price finds itself in.   When it does, we believe they will act fast and hard.

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Julian D.W. Phillips