Gold News

State of the Gold Market Today

The Gold market is holding and building a base at just above $1200, says this analyst...

emailed by some people saying that the Gold Price should soon plunge, possibly to as low as $850 an ounce, reports Julian Phillips at

The gold market doesn't agree, however. Perhaps it would be appropriate to look at the main factors cited for why Gold should fall, and why other analysts say it should rise.

  • First, if we are to believe the governments of Europe and the US, they have their government deficit problems "contained";
  • China's statements that it is continuing to buy Eurozone bonds (and US bonds) calmed markets that feared the worst. This implies calm in currency markets from now on;
  • The global recovery is holding, albeit slower than we thought;
  • Gold Investment demand could dry up any time;
  • Jewelry demand is not sufficient to hold prices at present high levels;
  • De-hedging by Gold Mining firms has virtually stopped;
  • Belief that the developed world economy will recover together with confidence, will lessen gold demand.
  • Interest rates will surely rise to make currencies more attractive to long-term gold investors;

Which side convinces you?

The European austerity measures are insufficient to drop the deficits to sustainable levels, let alone eventually repay any of this new debt. The US is not taking proper action to tackle the deficit. In fact so much confidence has been lost in so many governments financial management that either nations must undergo a decade of financial austerity or turn to inflationary policies to resuscitate growth and so cheapen debt itself. If they fail in any of their measures, there is nowhere else these nations can turn to, should this rescue fail.

Such failure could lead to the break-up of the European Monetary Union and likely the fragmenting of the Euro. This seems to be the likely course of action from now on.

Gold Investment demand is strong and likely to stay that way for the foreseeable future, because confidence in the global monetary system has decayed too far. Investment demand will not slow or fall as it is led by central banks.

China's central bank is a major buyer of gold, alongside Russia, and they still have decades of buying at the present rate to reach the goals they have set for themselves. Russia, for instance, wants 10% of its reserves in gold, compared to the current 4.6%.

Jewelry demand, meantime, is on the rise, even at these prices. And with current gold supplies insufficient to satisfy this level of demand should it persist, new supplies – both from the scrap market and from new mining output – can only come when prices are much higher.

Take a look one, five and ten years ahead, taking today's factors as the way things are going and ask, what does the future hold? This should tell you whether to Buy Gold or sell it today.

How best to buy gold right now? "If there's an easier way, I've yet to find it!" says one BullionVault user..

JULIAN PHILLIPS – one half of the highly respected team at – began his career in the financial markets back in 1970, when he left the British Army after serving as an Officer in the Light Infantry in Malaya, Mauritius, and Belfast.

First he worked in Timber Management and then joined the London Stock Exchange, qualifying as a member and specializing from the beginning in currencies, gold and the "Dollar Premium". On moving to South Africa, Julian was appointed a macro-economist for the Electricity Supply Commission – guiding currency decisions on the multi-billion foreign Loan Portfolio – before joining Chase Manhattan and the UK Merchant Bank, Hill Samuel, in Johannesburg.

There he specialized in gold, before moving to Capetown, where he established the Fund Management department of the Board of Executors. Julian returned to the "Gold World" over two years ago, contributing his exceptional experience and insights to Global Watch: The Gold Forecaster.

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 Forecaster/Julian D.W. Phillips have based this document on information obtained from sources they believe to be reliable but which it has not independently verified; they 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 Forecaster/Julian D.W. Phillips only and are subject to change without notice. They 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, they 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.

See full archive of Julian Phillips.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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