New York took the gold price back up to $1,659.00 yesterday after a flip flop day in most markets. Overnight Asia held it just $3 below that ahead of London’s opening today. The euro held pretty steady at €1: $1.3098. Today, gold Fixed it at $1,654.00 up $10 and in the euro at €1,261.632 up €5.5 while the euro stood at €1: $1.3110. Ahead of New York’s opening it stood at $1,659.00 and in the euro €1,262.51 while the euro was at €1: $1.3140.

Silver fell back to $31.64 in London from the opening. Ahead of New York’s opening it stood at $31.67.

Gold _{(very short-term)}

Gold, after a stronger start may show a weaker bias, in New York today.

Silver _{(very short-term)}

Silver may show a weaker bias, in New York today.

Price Drivers

Yesterday, in most world markets across the globe, we saw first a rise, then a heavy fall. The reverse was true in gold as it fell away to $1,631 before jumping. To see Treasuries fall alongside equities has, in the past, been synonymous with the start of a ‘bear’ market as investors rush to cash while the storm rages. It is becoming clearer by the day that global growth is on the slide. At the forefront of this slide are the weaker nations. At the forefront of these are the over-indebted nations for whom lack of growth creates a dire situation.

As in the past when a finance Minister [Spain] states categorically that a bailout will not be necessary, it is the course of wisdom to expect just that. With Spanish bonds approaching the alarm level of 6%, with Italy following hard on its heels, as we warned the other day, the crisis is in the process of morphing from a set of individual member’s crises to a total Eurozone crisis. Strange as it may seen, once surgery is done on the list of members, the euro will strengthen tremendously against the dollar, but with history in mind this could take more than a year still, if not longer, to complete.

In the States cash is becoming king, again. To separate global investor’s actions from local investor’s actions there is becoming more difficult. For instance, as foreign demand for Treasuries falls away and is replaced by local and Fed buying, the falls are softened, but the underlying message is serious. So the question for precious metal investors is, “Will gold and silver rise as a wealth protector or fall first as risk taking recedes.” A glance at where the weight of demand comes from gives us the answer. [To follow our weekly commentary, please subscribe to our newsletters at

www.GoldForecaster.com and at www.SilverForecaster.com.]

We have begun to issue articles on the future of gold in the global monetary system and comment on the Gold Standard. It is a five part series which subscribers will get in full. Parts of them only will be issued to the public.

Regards,

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