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It
doesn’t look special, but today is proving remarkable! In the euro the gold price is at
record levels at €1,078.01.
In the dollar it looks OK at $1,509 but it has been at $1,578 before
and is now nearly $70 off its peak. Why? The dollar stood at a recent
high at €1: $1,3997 early in London. It has started to weaken
slightly, but its rally looks intact still. So the dollar is looking strong,
or is it the euro that’s looking weak? Investors have to discern
whether it’s gold that’s performing or currencies that are
underperforming.
At the Fix, gold was set
at $1,508.50 and in the euro at €1,077.81, which confirms that this
price is the consensus in the physical gold market.
Ahead of New York’s
opening the gold price in the dollar stood at $1,507.20 and in the euro at
€1,077.58 and the dollar stood at €1: $1.3999 and looked like
weakening.
Silver is finding it hard
to follow gold at the moment and is standing at $34.78 three cents down on
Friday’s price after a Fix of $34.70.
Gold - Very Short-term
Gold prices should show a positive bias
today, in New York.
Silver – Very Short-term
Silver should continue to show a positive
bias today, in New York.
Silver & Gold Price Drivers
With the euro price of gold at new record highs demand for physical
gold remains strong. This
is happening at the same time as the dollar is only rallying against the
euro. Against the Swiss Franc and
other strong currencies it remains lackluster. So we must conclude that it is
the euro that is weakening against the dollar and gold. We believe that gold is moving
to the position that it defines value better than the dollar does or the
euro.
This is because the problems that the Eurozone
and the United States has to contend with really are undermining the ability
of these currencies to represent value. So long as this remains the case
[and we cannot see an end to these problems] the world will continue to move
to a point where they feel that gold is a ‘reference’ to real value
[As the Head of the World Bank suggested it should last year].
This week the Eurozone has to tackle its most
serious crisis yet. After
bailing out Greece before, they now have to face a reality they did not
factor in properly. In
formulating the bailout package for Greece they did not allow for the slowing
of revenues that would be used to repay Greece’s debt including the
bailout. In itself this
undermined confidence in their abilities, because they should have done. Now they are calling for more
loans to and more austerity from Greece. The markets have to ask, are
they going to get the formula right now? If they don’t make
sufficient allowances for Greece’s plight now, then the EU itself will
come under threat and the word default will become a reality for them. No wonder the euro is falling
and gold is rising.
Which is the most realistic price for gold, the euro or the
dollar? Or does gold
measure the price of the dollar and the euro in value terms? Or is such a discussion academic? If you ask a Chinese investor
the price, he will quote a Yuan price.
Ask an Indian and he will quote a Rupee price. That says it all!
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report.
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