Gold & Silver Market Morning, August 12, 2011

Gold fell from its rapidly reached peak of $1,800 to $1,750 in New York.   Asia lifted the price by $10 overnight where it traded in London ahead of the Fix there.   The $: € exchange rate held steady at €1: $1.4239 during London’s morning.   The Swiss Franc at $1: 0.7705 after trading as low as $1: 0.7296.  

Silver is still lagging behind gold at $38.67 up only 1 cents on yesterday.   In the euro gold is standing at €1,236.04.   

Today saw the gold price Fixed at $1,755.00 [$31 down] and in the euro at €1,231.23 [€23 down].   Ahead of New York, the gold price was slipping still down to $1,751.00 and in the euro to €1,227.74 and the euro weakening against the dollar to 1.4262.  Silver was Fixed at $38.29 up from yesterday’s $39.18 but fell back to $38.38 ahead of New York’s opening.      

Gold _{(very short-term)}

The gold price should be relatively steady, today in New York.

Silver _{(very short-term)}

The silver price should be relatively steady, today in New York.

Price Drivers

Yesterday and today are proving remarkable in the gold and silver markets today for one reason.   Relative to global equity markets, they are stable!   After reaching $1800 the gold price has pulled back to $1,750 a 2.7% fall only.   This is less than the moves in currencies on the day.   Traditionally analysts like to emphasize that gold and silver are volatile, as though other markets are not.   Yesterday has shown the reverse is true these days.    It is important to understand why this is true now.   The structure of the gold market has changed as has its role these days.   The question you have to ask is, ‘will this be a permanent change?’   We are commenting on this in the next issue of the Gold Forecaster and the Silver Forecaster, so we again, suggest that you subscribe to them to understand the markets you are seeing!

Today is one of those, ‘let’s take a breath days before we start the roller coaster ride again’ days.   The developed world financial crises has caught the political system not just off-guard but out of its depth.   Political rhetoric and inaction is what we hear and see.   Even after all these dramas the realization that systemic change is being called for has not penetrated.   Until it does the markets will continue to behave as we have seen over the last few weeks and years.   Gold will continue to outperform all other markets as investors increasingly see the need to do something to protect their wealth.   As politicians flounder, fearful of losing the support of their voters, the time will come when, because of not biting the bullet they will lose that support.   Spouting part political preferences will simply demonstrate leader’s inability to put things right.

Regards,

Julian D.W. Phillips for the Gold & Silver Forecasters