Gold
The dollar came under sustained pressure as the Independent of London’s
Robert Fisk broke a story stating that a group of Arab countries,
Russia, France, Japan and China and others were in secret discussions
to use a basket of currencies and gold to replace the dollar in order
to trade oil. Although some officials have denied this report, the fact
that it is mentioned at all raises the question as to how much longer
the dollar will remain the global reserve currency. According to
Chinese banking sources, the transitional currency in the move away
from dollars, may well be gold. Gold surged to $1,021/oz on the news of
this increasing threat to the petrodollar. The unexpected move by the
Australian central bank to increase interest rates may have also
pressurised the dollar. At some stage central banks will have to start
withdrawing the unprecedented monetary stimulus of recent months and
years. A rising interest rate environment from the unprecedented
historic low rates we have now is bullish for gold as it was in the
rising interest rate environment of the 1970s. Gold has risen through
resistance at $1,020/oz in recent minutes to as high as $1,025/oz and
looks set to challenge the record (nominal) high of $1,033/oz. A close
above the record high should set us up for the anticipated rally to
$1,200/oz.
Silver
Silver also moved upwards on the above news and is currently at $16.91/oz.
Platinum Group Metals
Platinum, palladium and rhodium are all up in morning trading at $1,300/oz, $302/oz and $1,575/$1,675/oz respectively.
