Prices of Gold and Silver Set to Rise!

By: Julian D. W. Phillips | Fri, Apr 4, 2008
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The focus in the gold market has always been on the $ price of gold and yet we have ample evidence of why we should not price gold in the US$, just as the oil price should not be priced in the US$. The fall of the $ has clouded the state of the global economy, its monetary system, as well as most of its markets. The gold and silver price has moved fairly closely with the € in the opposite direction to the $. But should it be attached so faithfully to the €?

A look at the Euro price of gold and silver is helpful keep our perspective on gold & silver:

The € price of gold and silver is a better reflection of their rise, because they are on a currency that has been a relatively healthy measure of value. By looking at gold & silver through these eyes, we are in a better position to gauge the consensus of global market opinion on the state of the world's money system without the corrupting influence of a weak $.

Gold and Silver: Inverse Measure of Confidence

For the gold and silver prices to be able to reflect inversely the levels of "confidence" in the world's money system, we have to put it in a position where it can do so, ideally in a currency "neutral" position, but this is not possible, so to choose a robust currency to measure it, would express global confidence at its best.

The currency of choice then becomes the world's second leading currency, the €, one reflecting a high degree of strength as shown in the foreign exchanges of the world. By pricing the two metals in the € we can also better see its 'safe haven' value against a strong currency. With the potentially disastrous times for the global financial system that we live in, such a solid gauge would help us to extract local influences, in particular the bad ones dragging that currency down and get a global perspective.

Should any of you doubt the level of danger the money system faces, you only have to listen to the Chairman of the Federal Reserve Mr. Ben Bernanke, describing just why the Fed had to step in and protect the entire U.S. financial system, which could easily have collapsed. There is no doubt in our mind that the ripples from that scenario would have sent a financial Tsunami across the entire global monetary system, probably causing it to collapse. So an item that can act outside the paper currency world, which is dependent on the performance of men and their management and reflect a 'common' value is needed in these days. [Please do not confuse this concept with that of usable money. Gold and silver have done this for quite a few thousand years before 1970.]

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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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