Gold - The Weekly Global Perspective

By: Julian D. W. Phillips | Mon, Jul 4, 2005
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HIGHLIGHTS in "Global Watch - The Gold Forecaster"
Silver - EDR.V, SSRI, PAAS, SIL, HL, CDE / Platinum

- Market Action / Short-term forecasts across the Board!
- Comex positions.
- Gold's independence from currencies what does it mean, really?
- The Yuan revaluation - The Chinese Premier speaks!
- Record prices for oil, looking solid and ready to rise more.
- Central Bank Gold Sales to date.
- Prospects for the U.S. $ and Prospects for the Euro.
- Prospects for the US $ / DJIA / 10-Year Bond / CRB / Gold : Oil Ratio Under 7.5!
- Technical Analysis - the Gold Price: Long/Short term in U.S. $
- Summary: The present Gold Price Drivers.
- International Gold Markets / Focus on Euro

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Excepts from the "Global Watch - The Gold Forecaster":

Recommendations: - We would advise future share purchases be made in weak currencies [please contact us for specifics]. The Rand should be one of these. Any fall in a currency alongside a rise in gold, leads to far greater profits than shares in a rising currency with a rising gold price. These increases can have a disproportionate effect on share prices there and profits in your hands, if you follow our full suggestions. For example, since we recommended Harmony, in the South African Rand they have gone from R40 to R58, a 45% rise!

Gold's Independence from Currencies - What does that mean, really?
The independence of gold in the different currencies does not mean that gold will move against all currencies at once. No, each different gold market faces different facets of the global problems that are now building up so will react to the gold price in their own situation in their own currency and not be driven by the $ price of gold in isolation. For instance, when the falls, Europeans will buy gold, irrespective of the $ price, as they are concerned with their own saving and investments. If the $ falls, then $ followers of gold will buy, probably at different times, because of different news. But global problems are flowing over into each of the global gold markets at different times, creating seemingly independent market reactions.

Only the rare, perspicacious, cosmopolitan Investor will be able to see the opportunities in the different currencies and combine his gold dealing to dealing in gold and gold related investments in different currencies. Hopefully we can help you achieve that viewpoint.

For instance, if you believe the will fall against the $ and you tend to be a 'bull' of gold in the $, then it would be better to buy gold with the , to maximise profits. This type of Investor is rare, but usually successful. Just as we 'ratio' trade, so we should extend to take the weakest currency against gold to maximise profits. Please contact us if you need clarity on this?

The Central Bank Gold Sales to date!

Sept 2004 - June 2005
  Oct Nov Dec Jan Feb Mar Apr May Jun C.B.G.A.
Yr so far
E.C.B. - - - - - - -47 - - 47 235 188
Austria - - -10 - - - - - - 10 90 80
Germany - - - - - - 0 -3.4 - 0 500 500
France -7.5 -23.2 -8.1 -7.5 -8.4 -11.2 13.2 - - 79.1 600 520.9
Nether - - - -10 -23.5 21.6 - - - 55.1 150 94.9
Portugal - - -20 - - - - - - 20 200 180
Sweden - - - -4.1 10.9 - - - - 15 45 30
Switzer -22.5 -22.5 -19.8 -22.2 -20.5 -21.5 - - - 129 129 0
EU ? - - - - - - - - 53.8 53.8 ? ?
Total -30 -45.7 -57.9 -43.8 -63.3 -54.3 -60.2   -53.8 -409 1949 1540
Source: World Gold Council Notes: Germany has only sold amounts minted into Coins.

These figures are the latest issued by the World Gold Council in its three monthly update. As you can see from these figures there remains 91 tonnes to be sold in the months July through to the 26th September, which marks the end of the first year of the agreement amongst the Eurozone Central Bankers. Clearly they assumed that the summer months would be quieter, so they allocated less gold for sales so as not to disturb the market price too much.

We can see that the agreement is very much on track, despite the loss of confidence in the seen at present in the market place. Will this change their policies? But Germany remains the enigma.

The figures give rise to certain questions:

  1. Provided the remaining 91 tonnes is sold in the next three months until the 26th September 2005, there will be only 1540 tonnes remaining to be sold over the next four years of the agreement from the public commitments made so far.
  2. Will Germany take up its option to sell 500 tonnes under the agreement next year? If it does not, then this will leave less than 1,000 tonnes to be sold over the next four years under the agreement, provided the balance of 91 tonnes is sold by the 26th September this year. Will other sellers replace Germany?
  3. Will the signatories of the agreement disclose their sales beforehand? The sales by the E.C.B. were not disclosed before, but are now set at 47 per annum through the agreement. The sale of 53.8 tonnes from the end of April until the 18th of June has not been attributed to any particular seller, why not?

The way the agreement is going indicates that there is a co-ordinated policy between the signatories to maximise the prices available to them in the market place, without deviating too far from the targeted 'ceiling', monthly requirements. This points to Germany going ahead with its sales of gold from October onwards. We would also expect an unannounced seller to appear in the market place from amongst the signatories, as occurred in May/June this year, if the total 'ceiling' of 2500 tonnes is to be reached by the end of the agreement.

From now onwards, we expect the agreement to suffer opposition as the suffers more loss of confidence. With the proceeds arriving in $ form, or in form, and gold moving upwards, this policy is clearly now, inappropriate when measured by sound investment criteria.

However, the E.C.B. policy of gold forming 15% of E.C.B. reserves will be extremely difficult to maintain if the gold price rises, as now appears likely. At what point will the Eurozone Central Bankers, in the face of declining currency values halt the gold sale policy. Right now, it appears most unlikely there will be any change in the agreement or the amounts intended for sale, we are sad to say.

After all, Gold is no friend of Bankers! Bankers would love a cash-free gold-free world in which they dictated values and controlled monetary systems. Gold holds them to account and leaves individuals controlling their own wealth, as we can see in the India of today.

The Global view is the professional picture!
Many observers in the U.S.A. and elsewhere find it difficult to look at the rise in gold being the result of the fall in the , not as an isolated event, but one soon to be followed by a return to a $ / gold dominance of the gold market. This won't happen, why?

The problem is really an emotional one. When you have visited another country, how long has it taken you to stop relating currency values to your home currency? Every meal, every price you see, you relate back to the cost in your own currency. Foreigners actually feel that the locals are foreign when they are overseas. A similar phenomena is at work here too. The difficulty in taking a global view of gold is one of familiarity. To stand back and take all the different parts and put them into a complete global picture will take time and adjustment, but to understand the gold price, one has to do that. That's what we are doing and hopefully we can help you. The benefits are you being able to buy and sell with understanding and confidence, when others don't have this insight and perspective. This has to lead to greater profits for you personally!

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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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