
http://www.zerohedge.com/article/morning-gold-fix-june-21-2010Courtesy of www.fmxconnect.com
Gold closed Friday at 1258.3 and has continued its advance in early Asian & European trading. Over the weekend, China announced that it would remove the Yuan’s peg to the Dollar and allow it to appreciate gradually. The Yuan rose to record strength against the dollar on the news and will continue to increase under China’s central bank measured management. Gold has gained from the subsequent losses to the Dollar and treasuries, with the August contract trading as high as 1266.5 this morning. A stronger Yuan has also led some speculators to believe China may use its increased purchasing power for gold, a contention we remain skeptical of given the quantity of domestic producers.

Someone likes gold: Gold spikes to a new record on heavy buying Friday.
BRIC SQUEEZE
There was plenty to be happy about if you are a Gold bull this weekend.
The stalking horse behind last week’s strength showed its hand in the gold markets. China made the announcement they'd be ending their peg to the dollar.
The Saudis revised their gold holdings up from 143 to 322 tons, a small (+125%) rounding error perhaps.
What's more, among the most read stories on Bloomberg was something from July 10 last year titled: Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8. The dollar barbarians are closing on the gates it would seem.
Last week, the IMF released a whitepaper of sorts discussing a new global currency. Most likely a red herring to get the conversation going at the upcoming G-20 meeting, but a sign of gathering momentum nonetheless.
Which brings us to the point. We think there is a greater chance than many that gold will be a factor in currency backing in the not too distant future.
Why a gold backed currency is more likely than you think:
1- Russia and Germany are working towards forming an alternative to the dollar as medium for exchange between their two economies. Most likely this will have some weighting of commodities in it. Natural Gas would be an obvious choice, since Russia exports to western Europe through the region.
2- China is decoupling, their buying power will soar
3- One thing the West still has more of than BRICS is gold. As a percentage of GDP and reserve holdings the U.S. Germany, France and England dwarf the BRICS.
4- throughout history, powerful people do what they have to preserve their incumbent status.
If it were me, and I wanted to stay in economic power, I’d buy all the Gold I could and then devalue the cash I used to buy it. Then I’d create a new currency backed by Gold. If I were stressing about budget deficits and weak partners in the ECB and I had a decent Gold hoard to begin with, I’d be thinking about that.
If I were all ready long gold and knew there was pent up demand out there coming from the BRIC countries and I had the ability to print money to buy more gold forcing the other buyers to pay up I might consider doing that.. Just saying….
August gold was up 3.8 to $1262.1 per 100 troy ounces as of 8:20 AM EDT, this morning. The September U.S. dollar index was down .076 to 85.9. July platinum was up 18.7 to $1597.8 per 50 troy ounces. Silver was up 18.6 cents to 19.37.
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-Elizabeth Thawne

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