Gold has fallen against the euro and
most currencies but is 0.2% higher in U.S. dollars and nearly 1% higher in
yen terms as the American and Japanese currencies have come under selling
pressure. Gold remains near record nominal highs in all major currencies
which shows that markets are concerned about inflation and concerns about the
future of major currencies.
Cross Currency Rates
The euro climbed to a three-week high
versus the dollar on speculation Germany and other European nations may
pledge more funds to bankrupt Greece and favourable
German economic data. This is more a reflection of dollar weakness rather
than any great confidence in the euro. The euro at €1,068/oz remains
under pressure versus gold and is less than 2% from record nominal highs at
While the focus, has of late, been on
the increasingly ‘unsingle’ single
currency, news overnight shows how there are also substantial risks posed to
the yen. Moody’s have warned that they may have to downgrade Japan and
have warned of a “tipping point” which may lead to a government
funding crisis for heavily indebted Japan.
Moody’s caveat that the risk is
long term in nature is likely underestimating the risk which is at least
medium term and may even be short term given the deepening economic crisis in
Japan today and the sovereign debt risks seen in the Eurozone
and in the U.S.
Gold in Euros –
The United Nations warned on
Wednesday of a possible crisis of confidence in, and even a
"collapse" of, the U.S. dollar if its value against other
currencies continued to decline. The UN’s mid-year review of the world
economy did not get covered widely.
The UN economic division said that a
crisis of confidence in the dollar, stemming from the falling value of
foreign dollar holdings, would imperil the global financial system. This trend,
it said, had recently been driven in part by interest rate differentials
between the U.S. and other major economies (see table above) and growing
concern about the sustainability of the U.S. public debt, half of which is
held by foreigners including the Chinese government.
Gold in US Dollars
– May (Tick)
A reminder, if ever one was needed,
of the importance of having a diversification into gold and silver bullion.
Cost averaging remains a sensible
strategy for those concerned that there may be further short term weakness in
On the 100th anniversary of the
launch of the Titanic, governments internationally appear to be engaged in an
exercise of “rearranging the deckchairs” prior to the ship
In the same way that there was a
popular perception that the Titanic was “unsinkable” so today the
real risk posed to the euro, dollar, yen, pound and other fiat currencies is
Gold in British Pounds
– May (Tick)
There is a real sense of both
desperation and denial about the debt crisis and indeed the global nature of
the debt crisis.
Many insolvent western governments
continue to simply “kick the can down the road”. This may buy
time but ultimately the misguided solution of creating more public debt to
cure a private debt crisis will be seen as a blunder and will likely lead to
even greater financial and economic challenges.
in the Middle East
Geopolitical risk in the Middle East
and North Africa remain high and will support gold.
Risks include sectarian tensions
between oil rich Saudi Arabia and Iran and instability in strategically
important Yemen where a combination of pro democracy protesters and Islamic
militants clash with an unpopular, corrupt and undemocratic government.
Sell in May?
It was a brutal month for silver
investors with silver down by 19.5% in dollar terms. Gold fared much better
and is only down 1.6% in dollar terms and 0.36% in sterling terms. Gold was
actually higher in euro terms rising by 1.07% and this and the charts above
are hardly indicative of a bubble rather of a further period of correction
We have long warned regarding the
short term volatility of silver and hence danger of attempting to trade or
time the silver market.
If ever there was a market to
“buy and hold” it is the silver bullion market. Those who
continue to buy silver bullion coins and bars and store in safe depositories
will be rewarded in the coming years.
Absolutely nothing has changed
regarding the fundamentals of the silver market and this sell off was due to
the massive concentrated shorts being involved in a short squeeze,
unprecedented margin increases and increasing investment and industrial
demand for silver.
This demand is particularly strong in
China and Asia and among a minority but increasingly vocal and influential
band of silver advocates who believe that silver is money and will help
protect people from developing problems in the western and global financial
and monetary system.
Gold is trading at $1,538.57/oz,
€1,068.01/oz and £932.525oz.
Silver is trading at $38.64/oz,
€26.82/oz and £23.42 /oz.
Platinum is trading at $1,828.50oz,
palladium at $774/oz and rhodium at $2275/oz.
(Reuters) -- PRECIOUS-Gold
near 4-week high; Greek crisis on focus
(MarketWatch) -- Gold futures gain as dollar weakens
(WallStreetJournal) -- Normal Rains Could Drive India Gold
(Reuters) -- U.N.
sees risk of crisis of confidence in dollar
(RTE) -- Mark
O'Byrne on RTE's One O'Clock News (16 minute; 31
(ZeroHedge) -- Despite Preemptive Gold Margin Hike In
Shanghai, Gold Is Poised To Close May Near Record On Sovereign Risk Worries
(KingWorldNews) -- Richard Russell - Subscribers Should
Buy Silver Once Again
(ZeroHedge) -- Chinese USD Diversification Continues:
First Euro Bonds, Now JGBs
(MaxKeiser) -- Argentina’s Economic Collapse
(Goldseek) -- How gold could reach $13,644 an ounce and
(MarketOracle) -- Economic Green Shoots, Exit Strategy, No
QE3 Money Printing