Gold - The
Weekly Global Perspective
When the dam breaks
Julian D.W. Phillips
Aug 15, 2005
Excerpts from the "Global
Watch - The Gold Forecaster."
As we forecast, the gold price
has broken out earlier than usual this time of year, normally
the "Doldrums" for the gold market. There are good
reasons for this! This half of the year will not be a simple
case of upward only.
Here are two
of the four main fundamental points driving the gold price in
the short term [they must be taken in context with the other
information we present]:-
1) The
C. B Gold Agreement: - 500 tonnes gone before the end of the
C.B.G.A. year?
From John Brimelow
came reports of sales of around 20 tonnes, seemingly from Spain.
This left around 33 tonnes remaining from this year's 'quota'.
This week came this news:-
The National Bank of Belgium
hereby announces that it has sold 30 tonnes of gold during the
months of July and August. These gold sales took place within
the framework of the gold agreement (the "Central Bank Gold
Agreement"), which was concluded between 15 European central
banks, including the National Bank of Belgium, on 8 March 2004.
The reduction of the gold reserve will enable to increase the
yield of the Bank's assets.
If John Brimelow's numbers
are right, then there remains only 3 tonnes left of this
year's C.B.G.A. sales of gold, to last from the middle of August
to the 26th of September! The monthly average of gold
supplied by the Central Banks is 41.67 tonnes [500 tonnes over
12 months], then the market is without 45 days worth of its budgeted
amount. More importantly this was sold when the gold price started
to 'spike'. With this no longer there we should have a cracking
second half of August / beginning to end September! Add this
to the other positive factors for gold and we should have quite
a bull charge start to the post-holiday gold market.
But will the C.B.G.A. hold
to their agreement? Whatever the Central Banks do now will show
their true hand and we will see it in the gold price.
By the way, the Bank of Belgium
intended, they say, to increase their yield through the assets
they bought, was it the U.S.$ or the ¤? We were not informed.
As we saw this week, the fall in the U.S.$ was close to 3%, only
1% or so off the yield the bank will make for the entire year.
If they purchased the ¤, they tell another story as that,
like gold, rose the percentage the $ fell. But to switch out
of gold for 2%?? But still they would have avoided the $? So,
from a reserve management not too much good investing was carried
on in this deal.
2) Indian
Market makers - gold stocks low and falling!
Last week we highlighted the absence of Indian manufacturers
and stockists from the market. The Indian market, with their
unwillingness to pay prices they feel too high until the market
has consolidated, has moved into a precarious position. Their
dislike of paying more than they have to is extremely strong,
to the extent that they will hold off until convinced that prices
are going to hold.
Right now they have been holding
off since the gold price was below $420 and are still out of
the market, unable to accept prices at the current levels, yet.
As prices started to rise the heaviest of the rains came and
disrupted the gold market, so keeping buyers out as the prices
rose.
If prices hold at these higher
levels, the Indian buyers will come back to the market and pay
up for their gold to give them stock for the Festival season
too.
The same happened previously
last in November / December 2004. At that time they held off
buying, despite good Deepavali 2004 sales, expecting prices to
pull back to below $420 when the gold price was around $435.
When it did not pull back, they rushed into the market paying
cutting their losses at $451 - $453, very close to the peaking
of the gold price. When the gold price then fell to its low in
the middle of February 2005 they built up their inventories again.
As in the developed West and
Europe, individuals in India believe their market is controllable
by their market. They believe that patience and holding off from
buying will lead to lower gold prices, sooner rather than later.
It does too, provided they are the dominant force in the market,
but gold is a global market, an amalgum of markets and influences
from currencies to uncertainties, to simple demand and supply,
making gold price forecasting far from simple. Now the market
is bursting up again, they find themselves getting shorter and
shorter as their stocks dwindle. They are still holding onto
the hope that they last had when they bought with vengeance as
prices came down to $411 in mid-Feb. 2005. But do they have the
right perspective to get it right in the future?
The Indian market appears to
ignore Technical Analysis, the forecasting of prices by past
patterns of prices. Whilst in a global market with changing fundamentals
Technical Analysis alone is far from reliable, but combined with
fundamental analysis with global insight and perspective, it
can greatly assist in improving on the buying performance described
above.
Perhaps they should subscribe
to this publication?
The pent-up demand spawned
by this situation is bound to give a tremendous upward impetus
to the gold price, when the dam breaks!
To subscribe to "Global
Watch - The Gold Forecaster" please go to:
www.goldforecaster.com
Julian D.W. Phillips
Legal Notice
/ Disclaimer
This document is not and should not be construed as an offer
to sell or the solicitation of an offer to purchase or subscribe
for any investment. Gold-Authentic Money / Julian D. W. Phillips,
have based this document on information obtained from sources
it believes to be reliable but which it has not independently
verified; Gold-Authentic Money / Julian D. W. Phillips make no
guarantee, representation or warranty and accepts no responsibility
or liability as to its accuracy or completeness. Expressions
of opinion are those of Gold-Authentic Money / Julian D. W. Phillips
only and are subject to change without notice.
Gold-Authentic Money / Julian D. W. Phillips assume no warranty,
liability or guarantee for the current relevance, correctness
or completeness of any information provided within this Report
and will not be held liable for the consequence of reliance upon
any opinion or statement contained herein or any omission. Furthermore,
we assume no liability for any direct or indirect loss or damage
or, in particular, for lost profit, which you may incur as a
result of the use and existence of the information, provided
within this Report.
You should
be aware that the Internet is not a completely reliable transmission
medium. Neither Gold-Authentic Money / Julian D.W. Phillips nor
any of our associates accept any liability for any loss or damage,
including without limitation loss of profit, which may arise
directly or indirectly from your inability to access the website
for any reason or for any delay in or failure of the transmission
or the receipt of any instructions or notification sent through
this website. You agree not to reproduce, re-transmit or distribute
the contents herein.
321gold Inc
|
