Gold and silver have reached new all-time and 31-year record highs in trading in London this morning.
Silver is particularly strong and the euro particularly weak on sovereign debt contagion concerns.
Inflation and sovereign debt fears are leading to continued safe haven demand. It is as important as ever to note that the record highs are nominal highs and inflation adjusted gold and silver remain a long way from their respective highs of $2,400/oz and $140/oz in 1980. These inflation adjusted highs remain viable long term price targets.
Cross Currency Rates at 1200
Precious metal prices at record highs are symptomatic of the degree of macroeconomic and geopolitical risk in the world today. These risks do not look like dissipating anytime soon, which will likely lead to higher precious metal prices.
$1,500/oz and $50/oz remain short term targets. Resistance levels have been breached and thus these psychological price points will likely now be tested. Trading and timing markets remains high risk but astute hedge funds and other traders will continue to make the trend their friend'.
Gold in USD and Gold in EUR - 5-Year (Daily)
The risk of contagion in the Eurozone and internationally remains real. Already seriously indebted taxpayers in many western countries are set to struggle with the massive liabilities incurred from bailing out western banks.
This is leading to the possibility of even more quantitative easing, a massive increase in money supply and currency debasement on a scale not seen since our modern monetary system came into existence when Nixon announced that the US would no longer convert US dollars to gold and the world entered the era of fiat paper currencies not backed by precious metals.
The record highs were greeted with little coverage and no fanfare. What little coverage there is, remains almost exclusively in the specialist financial press (such as the FT, WSJ, Reuters and Bloomberg). Very occasional treatment in the non-specialist financial press remains superficial and negative.
The negative treatment of gold and silver is in marked contrast to the treatment of more high risk individual equities, and equities in general. Bearish sentiment abounds and we have seen a lot of profit taking this week. These are tell signs and contrarian signals that gold and silver are far from the bubbles that some have been claiming for a time.
Risk appetite remains high. Predicting future price movement of securities, a trading mentality and speculation remains rife. This comes at the expense of a real evaluation of risk and educating the public about the importance of real diversification and holding quality assets passively in a low risk and low cost way.
Gold is trading at $1,477.64/oz, €1,022.94/oz and £903.64/oz.
Silver is trading at $42.50/oz, €29.42/oz and £25.99/oz.
Platinum Group Metals
Platinum is trading at $1,783.50/oz, palladium at $7/oz and rhodium at $2,300/oz.