Gold & Silver Market Morning, August 17, 2011

In New York yesterday gold rose $28.00 to $1,781.70, while the SPDR gold Exchange Traded Fund saw 12 tonnes sold. Overnight, in Asia, gold again rose another $5.   After London opened, gold again rose another $10 to $1,794.2 ahead of the morning Fix.   The euro was stronger by 50 cents at $1.4432.   In the euro the gold price was €1,243.21 up €8.   The Swiss Franc and the Yen are now being forced slightly higher after the Swiss National Bank increased the Franc’s liquidity in the market.   Today saw the gold price Fixed at $1,792 up $13 a total of $54 in two days and in the euro at €1,240.4 up €26 in two days.   Ahead of New York it was pulling back to $1,784.00.

Silver was stronger at $40 up 50 cents from $39.50, then it Fixed at $40.02.  It is now starting to move again with gold despite more sales in the U.S. and stood at $40.05 ahead of New York’s opening.     

Gold _{(very short-term)}

The gold price should have a stronger bias, today in New York.

Silver _{(very short-term)}

The silver price should have a stronger bias, today in New York.

Price Drivers

It looks like the euro will collapse due to a hormone deficiency.   After the absence of the effective measures to eradicate the Eurozone crisis the announcements by Chancellor Merkel and President Sarkozy, the Eurozone leaders confirmed their indecisiveness.   As we said yesterday, “We don’t think gold will wait much longer though.   And silver has started to move with gold again so watch it carefully.”   -  Voila and Danke!

After all, when the laws passed to restrain government deficits failed, pass another one.   When the E.U. members guard their sovereignty so carefully, call for political integration.   To make sure your efforts are not disregarded call for a defense of the euro.   That’s why the euro is up only slightly against the U.S. dollar [or has the dollar started to fall faster than the euro?].   Nor does the Swiss Franc seem to be having success in weakening itself despite the extra liquidity.   

Exchange rate intervention rarely succeeds, it simply offers the big holders of a currency to offload big quantities or buy them at good prices.   Is it any wonder gold looks stronger?   This, in reality, is currency weakness, not precious metal strength!  

 The Swiss National Bank will boost liquidity to the money market, expanding banks’ sight deposits to 200 billion francs ($253 billion) from 120 billion francs.   It will also continue to repurchase outstanding SNB Bills and use foreign-exchange swap transactions.   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!

Regards,

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