Well, it's been a turbulent last couple of months in the markets to be sure, with the eurozone countries being picked off one by one until they are forced into fiscal union via the eurobond. Of course, as soon as the crisis in the EU is resolved, all eyes will once again swing back to the USA, which is in an even worse position than Greece. Needless to say, the Americans have a vested interest in keeping the focus on the "Euro Crisis"
However, apart from all that, the first thing I wanted to look at is the recent activity of the AUD.
Ok, now this is the daily chart for the AUD/USD pair, with a line highlighted where the AUD reaches Parity with the USD. Notice that after falling though that line half way through May, they are now nearly back at parity. In my opinion, this is because of currency inflows from foreign countries, since the AUD is seen as more secure than either the EUR or the USD.
However, the RBA, after announcing it's rate cut (which was probably responsible for the rise again back towards parity) have said that it is the AUS Govt's policy to let the dollar drift lower to make their exports cheaper.
Now this warrants two comments. Firstly, if a country wants to make it's currency cheaper, then it can easily do so by printing money. Of course, if this is known, it will severely degrade the value of the currency, but I think that many banks have been controlling currency prices by printing extra money and releasing it into the market when the currency is about to hit a certain high limit. The Swiss for example have been defending the EUR/CHF at €1.20 by saying that they are prepared to print 'limitless' amount of currency to ensure the franc does not rise. Now this is not a problem for the swiss because their economy is in good shape, and so is Australia.
My main point in this context is that if you are sotring funds in the AUD, then there is a good chance it will go down. How far down has more to do with what price Australian goods would become more competitive on the world market, but I believe that the RBA could easily be targeting 0.9USD, which will mean effectively a 10% loss to your cash assets, _ontop_ of inflation.
Ok, this is the daily chart for Gold. As you can see, it hit a low of $1540 in the middle of May (which is when i bought the bullion). It has since then, swung up and down over the prospect of a Euro Bailout (up) and at Ben Bernanke Talking up the USD (down). I will show you a chart on a tighter timeframe to show you what I mean.
This is Gold on a 4hr timeframe. Notice the massive spike up on the weekend before the 3rd of June, when the Spanish Bailout was announced, and notice the big fall on the 9th of June when Bernanke Talked up the USD. Also, you might not be aware of this, but gold is quoted in dollars, euros and pounds now and although gold has risen quite a bit in dollars, it's upward movement has not been as marked un EUR of GBP, indicating that the USD is in much worse shape than either the EUR or the GBP. Infact, the truth of the matter is that the USA is actually in a worse position than Greece. If it were not for foreign sovereigns holding their debt as reserve and the pricing of oil in dollars, the USD would collapse, which I intact believe it is going to do. I cannot say when, but I am certain it will happen. However, before we get to there, the EU problem has to be fixed by bringing in Eurobonds so that American Traders cannot target small european countries by shorting their bonds and downgrading their banks.
Now, the next Major thing that will effect Gold is the Greek Election, which I believe is this weekend. If they vote for Austerity, gold will fall and I plan to buy on the dip. If they elect to go the other way, Gold will rise in the uncertainty. In fact there may be some very good buying opportunities while the chaos of the Greek Election is still being sorted out. I expect the Price to swing widely.
Next, we turn to Silver
This is the daily chart of Silver and I hope you can see why I am buying it up at the moment. It is due for a sharp rise sometime soon, because output has apparently dropped quite dramatically and it could soon be rarer than gold. Note that this chart is for 5000oz of Silver, which makes the actual silver price per ounce is $0.579. It's low price means that if it goes up just 50c an ounce, it's price will double.
Services such as Bullionvault lets investors buy fine london silver. I have already bought half a kilo just before the start of June and it has appreciated significantly already.
In fact if you take a look, will notice that gold and silver often follow one another, this is called convergence and you can trade based upon the principle that if the markets diverge, you can make money by betting that they will re-converge.
With inflation being what it is, I seriously suggest that we store as much cash as possible as gold and silver bullion. It will not only make a better return, but does not suffer the ravages of inflation. Also, in the event of a currency crisis, which I suspect is much more likely than many people are being told, then we will still have a safe store of value and we will be able to pick up assets very very cheaply then sell them off when the markets recover.
This is how the Rothschilds made their money (of course, it is more complex than that, but essentially, by always being forwarded of a currency crisis and having all their money in gold, they were always in a position to exploit a market crash wherever it happened and believe me, it will happen again.
The MASSIVE debt to GDP ratio's of the modern western countries puts them in a very perilous position. If their cost of borrowing money rises even slightly, then they have to spend much more money servicing their debt. This soon becomes a downward spiral as the country starts printing more money to pay off the debts, thus diluting their own currency and effectively stealing it from the populace via inflation.
Bullion is not subject to any of these problems or restraints, which is why I recommend it so highly.
Christopher Carrion
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