Gold and silver continue to rebound from their sell offs as Euro zone periphery worries intensify with real risks of defaults and possible contagion. Gold has risen from €1,010/oz to over €1,057/oz since Friday. The long period of correction and consolidation may soon see a break out above resistance at record nominal highs of €1,072/oz - less than 1.5% below the current price.
Cross Currency Rates
The recent strength of the euro looks set to end as sovereign debt risks come to the fore again. This will likely see the euro fall versus most currencies and especially against gold.
There has been the usual misinformed and non evidence based assertions that the gold and silver markets were 'bubbles' and that they have burst. The same simplistic assertions were made after the sharp price corrections seen in 2008 and were proven badly wrong.
Gold in Euros - 4 Day (Tick)
There may have been a degree of speculative froth in the very short term, particularly in the silver market, however as we have continually shown in recent months both the CFTC's Commitment of Traders reports and the total ETF gold and silver holdings did not show evidence of retail investors piling into these markets.
A tiny minority of retail investors demanding physical bullion may be beginning to effect prices marginally but they continue to be but small players in the bullion markets - especially when compared to the power and financial clout of Wall Street banks, hedge funds, pension funds and central banks.
Gold in Euros - 1 Year (Daily)
Those diversifying into gold and silver bullion would be advised to continue to ignore those who simplistically call gold and silver bubbles. Many have been calling gold and silver bubbles since early 2008 when gold rose above $850/oz and silver rose above $20/oz.
Most failed to warn about the bubbles in equity and property markets and therefore do not have a good track record in this regard.
Their analysis continues to be selective and simplistic and can occasionally be biased. The fundamentals of supply and demand and the small and finite physical bullion markets being confronted with robust increased demand internationally and particularly in China, India and wider Asia are ignored.
As is ultra lose monetary policies and currency debasement on a scale not seen in modern history.
Rather than continually attempting to call the top of the gold and silver markets and thereby discouraging people from owning the financial insurance that is gold and silver - it would be wiser to admit that they cannot predict the future and that people should be diversified in order to protect against the extraordinary degree of macroeconomic, monetary and geopolitical risk in the world today.
Gold is trading at $1,516.58/oz, €1,056.70/oz and £927.03/oz.
Silver is trading at $38.52/oz, €26.84/oz and £23.55/oz.
Platinum Group Metals
Platinum is trading at $1,797oz, palladium at 731/oz and rhodium at $2,075/oz.