Gold - The Weekly Global Perspective

By: Julian D. W. Phillips | Fri, Apr 23, 2004
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This week only, samples are available at the Gold Authentic Money web site. When you get to the site, click "Subscribe" and you will see the available samples.

Gold Authentic Money uses Maximum Entrophy Spectoral Analysis to give the timings of the highs and lows of the metals etc as well as a Comparative Share Performance Model. This highlights the leaders and the laggards amongst the best gold and silver shares, in the world.

That was the week that was!

Take a deep breath and see the fall has been the picture this last week. All's well in the U.S. economy. This had the funds dumping their positions, dropping, possibly, the entire genuinely speculative position they built up so quickly just a couple of weeks ago, which took the large scale speculative fund positions to 609 tonnes of gold, a massive record.

Gold fell to $390, before bouncing, with a flood of orders for physical bars of gold pouring in at the lower levels! Will this physical demand be enough to pick up the liquidation of long positions? With local gold price premiums in India as high as $10, the flood will continue, it seems. No doubt, the de-hedgers are in at the fall, picking up cheap stock! Are we at consolidation levels for a bounce, or are we falling over the cliff out of the rising trend?  With gold trading at $394.65 and seemingly holding, this is a big question!

Even in Euros the gold price fell back to Euros 330, a fall from the heights of Euros 347. Not much compared to the $30 it fell in $. This volatility should still continue.

Is this a terrific buying opportunity, or the break of the upward trend for gold? Attention must move away from the U.S. economy before the next moves become clear.

At the time of writing gold stood at $394.65, and Euros 331.861 with the Euro itself worth $1.1892.

Wouldn't you like to know the approximate dates of the highs and lows and which shares will lead the pack and which will lag? In "Changing Tack - Gold & Precious Metal Shares" we, through our Maximum Entrophy Spectoral Analysis system and Comparative Shares Model, do that for you.

As an indication of our success, our Subscribers have been short of Silver since $8.00!

The U.S. recovery.

The story that drove the gold price this week was the positive state of the U.S. economy. In his usual phlegmatic, unflappable style, this revered man Greenspan, delivered the news that the citizens of the U.S. have been waiting for. He confirmed that all is well in the United States. The economy is growing as he wants! His testimony had the market jumping to the positive, but why didn't the Dow reflect this in an ebullient rush upwards? Now the talk has switched to when interest rates will rise, now that deflation is out of the way. Amidst all the voices giving us dates when they will, is a voice saying that they will rise when the Fed believes that inflation is taking off and a threat. With the P.P.I rising 0.5% in March, all eyes will be watching inflation now!

Meanwhile, we would add weight to a key factor, the fragility of the individual consumer's spending patterns. He is enjoying the fat of the land right now, but could be wounded by rising rates hitting him, alongside inflation. A difficult call for the Fed for sure, so where next?

Gold and Interest rates - different directions?: - No doubt about it, Speculators believe that interest rates and the gold price go opposite ways. In the last few years we have seen dropping interest rates and rising gold prices after a period when dropping gold prices followed rising interest rates. But look back further and take an overall view and we find that this was an exception and that the correlation is indeed small. No easy formula there!

Aah, you may say, what about the 'contango' [Where the price for future delivery is greater than the 'spot' price] growing with rising interest rates rising, won't that prompt hedging and so selling of gold? In short the answer is No! Producers and their Shareholders have made it abundantly clear, over a long period of time now, that they want exposure to the 'spot' gold price.

But the Speculators hold sway and are in the process of liquidating their positions with their usual overwhelming ways

G.F.M.S. report.

Up from 310 tonnes to 340 - 400 tonnes of de-hedging is expected this year, with a gold price of $450 expected from the most respected gold consultancy around! We will be reviewing this report to get the overall picture for this year's expectations and the probable gold price to be seen soon, in "Gold - Authentic Money".

Gold Bullion Securities

Having 're-invented' itself Gold Bullion Securities, where one share equals one tenth of an ounce of gold is showing good results so far. A sharp increase in gold held in trust, took the total, including the volumes held for Australian Investors to 56.5tonnes. This volume is becoming a significant feature of gold demand, representing we believe, long term holders of gold. In a market where supplies are increasingly having to come from scrap, such demand could help to underpin and may elevate, the gold price, at critical points.

German gold sales, now almost a certainty.

So quick, and the axe fell on Welteke! His resignation last Friday came as a disappointment, as the independence of the Bundesbank comes into question. Now we adjust our opinion of German gold sales, in the light of these events and say they are almost certain to take place as the German government places its 'own' man in Welteke's shoes. We would go so far as to say that the proceeds will go wheresoever, they want.

Please note that if one does not understand the issues involved you will not understand the long term gold price. Subscribe to find out!

Silver

Even after the bounce Silver is down at $6.12 and our Subscribers are very happy, where they followed our advice?

At the time of writing Silver was trading at $6.12.

Platinum

Whilst the fundamentals remain sound on Platinum, this week we take a purely Technical look at Platinum. We place historical prices on a mathematical basis to enable us to conduct a Maximum Entrophy Spectoral Analysis which indicates the highs and the lows of the item analysed. We do this on all the prices covered in our services, giving you an added view on your portfolio. Our Subscribers find this invaluable.

The attached weekly chart of the platinum price shows that since the low of $404 made on the 5th of October 2001, the rise unfolded in 5 waves. It appears that the 34-week indicator is now overbought at 99.9 and our weekly M.E.S.A. [Maximum Entrophy Spectoral Analysis] declines until the week ending the 1st of July 2005. The range of wave 4, support is $700 to $600 and .236 and .382 Fibonacci retracement levels are $810 and $733

We will be looking at Platinum closely in "Gold - Authentic Money" in a future issue.

At the time of writing Platinum was trading at $846.

The London Gold Fix

Gold Fix 22nd April p.m. $392.30    E 330.19
        23rd April a.m. $396.25    E 333.21


 

Julian  D. W. Phillips

Author: Julian D. W. Phillips

Julian D. W. Phillips
Gold Forecaster

Julian D. W. Phillips

"Global Watch: The Gold Forecaster" covers the global gold market. It specializes in Central Bank Sales and details, the Indian Bullion market [supported by a leading Indian Bullion professional], the South African markets [+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $, Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the influential gold price factors across the globe, so as to truly understand the global reasons behind the gold price.
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