After a weekend of critical European elections the gold price started the week in Asia lower at $1,638 lower in the dollar [-$3] but higher in the euro at just below €1: $1.30 then recovered. In the euro the gold price stood at €1,260 up €20 just ahead of London’s opening. There is no Fixing in London today as it is a public holiday. Ahead of New York’s opening it stood at $1,641.25 and in the euro €1,258.53 while the euro was at €1: $1.3041.
Silver Today - Silver was$30.14 before Lo0ndon’e opening. Ahead of New York’s opening it stood at $30.30.
Silver (very short-term)
Silver will prove volatile, with an upside bias, in New York today.
A tidal change in the path of European politics took place over the weekend under the guise of focusing on growth instead of austerity. With the Socialists winning in France and the anti-austerity parties taking a grip in Greece, the Eurozone is suddenly back in deep crisis mode. With the euro opening the week below €1: $1.3 the markets are very unhappy at the prospects for the Eurozone debt crisis. If the far left or far right in Greece take power, they will want to renegotiate the bailout package. [Please note, the dollar is weakening against other hard currencies, too]
The discussion should not be linked with the state of Eurozone economies but with the State of national debt management. The dangers lie solely in the area of financial management and debt management. A softening of the current austerity path to easier conditions will undermine the stability and value of the euro. The euro is therefore more than likely to weaken against the gold price as we are seeing now.
Already the weaker nations of the Eurozone have seen a massive flight of capital from their banks and in the growing trade deficits there. Add to that the national debt situation and their crises have morphed into a total Eurozone crisis as politics and finances are moving to a confrontation of far greater proportions than we have seen before. It is in this environment that investors run to cover to safer places with their wealth. Silver alongside of gold will be among the choices made by a far wider type and more numerous investor base. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.]
In short, over the weekend, we have seen a gear change in the Eurozone debt crisis, but a move away from austerity to growth, but at what cost? This has not been a good weekend for the euro, but a good one for gold and silver.
Julian D.W. Phillips for the Gold & Silver Forecasters