New York took the gold price down alongside the fall in the euro to $1,656.10.As the euro continued to fall, the gold price slipped back with it in Asia to $1,643 ahead of London’s opening. The euro held pretty steady at €1: $1.3009 down 1% or1.39 cents. Today, gold Fixed it at $1,648.25 and in the euro at €1,266.034 while the euro stood at €1: $1.3019. Ahead of New York’s opening it stood at $1,650.75 and in the euro €1,266.40 while the euro was at €1: $1.3035.

Silver fell $0.86 or 2.66% New York to $31.47. At the opening in London it slipped to $31.30. Ahead of New York’s opening it stood at $31.50.

Gold _{(very short-term)}

Gold should consolidate at lower levels, in New York.

Silver _{(very short-term)}

Silver should consolidate at lower levels, in New York.

Price Drivers

Again the decline of the euro dominated the gold and silver prices in New York last week, Friday. Traders dominated the moves at a time when the main world gold markets were closed. While the dollar figure of falls appear large it is good to reflect on the percentage of the fall, which is small. If one looks back over the last few months one can see that we are looking at a major consolidation structure on the charts. Readers should therefore be aware that we are close to seeing this consolidation being completed, at which point we fully expect a major move of substantial proportions. The move could happen either way. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.]

The big news at the start of the week is that announcement that the trading width of the Chinese Yuan on the markets. This is a prelude to a full convertibility of the Chinese Yuan next year. It is significant in that it signals that the ability of the Chinese banking system to handle full convertibility of the Yuan is now in position. The next phase is for the banking system is to be able to handle market volatility. This is a matter of experience not building structures. Once this is completed then bigger volumes of transactions will be accommodated. Then we expect to see the arrival of a currency on the world scene that will take a growing portion of global trade in the future. This will be at the cost of the U.S. dollar in world trade. Let it be enough at this stage to say that the exchange rate value of the dollar is entirely dependent on its retaining the percentage of world trade that it has now. Every portion of loss of that percentage will permanently weaken the dollar and all currencies reliant on the dollar.

Needless to say, gold and silver in this changing climate will retain their value as uncertainty levels rise in the changing currency scene. We do not expect the Yuan to rise against the U.S. dollar.

Regards,

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