Gold to drift higher
Author: Julian Phillips
Posted: Wednesday , 18 Jun 2014
Johannesburg (Mineweb) -
Julian Phillips of the Gold Forecaster talks about the fragility of markets, economies.
Again we expect the gold price to ‘drift higher’ today on thin trading. We see markets trying to calm down in the face of the changed picture in Iraq. And we believe the change is medium to long term, not just short-term. New Middle East demand will come through over time, not in a rush, we expect.
Eyes are on the South of Iraq and the Basra oil terminal. However, if they get close enough to cause foreign workers to leave there [as they have at Baiji] then the oil price could run up to $140 irrespective of extra supplies from the U.S. or Saudi Arabia.
At that point we expect Iran to send troops north to prevent the Sunnis grabbing that oil, but as we said yesterday, this will place that oil under their control. Then the gold and silver prices will charge up as oil prices create inflation and deflation simultaneously.
The economic condition of the developed world might well find that such a new crisis will be just too much for it. It appears that U.S. talking, or that of anybody at this point, will be useless. It is a matter of who is taking action.
Eyes are on the Fed once more. This time, with a ‘new normal’ in the developed world, we expect the words from Ms. Yellen to reaffirm the low interest environment and could indicate future, further stimuli to the U.S. economy. This is gold positive.
Such a stance will also affect the other side of the Atlantic as developed world lack of growth will be affected alongside the growing threat of deflation. We have reached the point where either inflation or deflation will have a gold positive impact, as the economic state of the world becomes more and more fragile.
Silver – Silver should move up faster than gold still. |
