Despite Assurances By G7, Silver & Gold Still Climbin’
The G7 announced on Sunday that it will do everything it can to stabilize financial markets and to ensure liquidity in the markets. The Finance Ministers and Central Bank Governors of the G7 also stated that currency rates should be decided by markets. Specifically, in regards to the US and to Europe, the G7 stated:
The U.S. has adopted reforms that will deliver substantial deficit reduction over the medium term. In Europe, the Euro area Summit decided on July 21 a comprehensive package to tackle the situation in Greece and other countries facing financial tensions, notably through the flexibilisation of the EFSF.
Despite the assurances on behalf of the G7—a beleaguered group of industrialized nations—precious metal markets spiked sharply at the beginning of Asian trading on Sunday. Gold futures surged to yet another record of $1697.70 an ounce, as the dollar slumped following S&P’s downgrade of US long-term credit rating. As of Sunday evening at 7pm west coast time, the gold spot price was up $30 from its Friday close, sitting at $1694.
“Gold will most likely be a sharp recipient of safe- haven flows” said the London-based Edel Tully over the weekend. Our previous one-month forecast of $1725 is likely to be easily met in the short term.”
US stock futures and crude oil plunged, after a week during which investors sold equities and most raw materials for the perceived safety of Treasuries, the Swiss franc and gold. Before Sunday’s move up, the metal had already appreciated 16% on the year.
“Most likely there will be a quest for physical gold, from both U.S. and European investors,” Tully stated. “The fear trade, as seen through the purchase of small bars and coins, will intensify as confidence diminishes, not just in the U.S., but fear of contagion to other AAA nations will prompt additional physical buying in European.”
Silver too returned to its trading price of last week, before it crashed from $42 to the high $37 range, furthering the case that, as global economic uncertainties steepen, the white metal will break free from its manipulated market status. Expect silvers price to continue to act in accordance with its safe haven demand, as opposed to its industrial demand.